RBI reduces Repo Rate by 35 basis points, Home, Auto Loan EMIs to ease

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Mumbai : The Reserve Bank of India (RBI) has reduced the Repo Rate by 35 basis points to 5.40% from 5,75 earlier. The Reverse Repo has also be revised to 5.15 %. The decision was announced today by the Monetary Policy Committee (MPC) of RBI after its 3 day meeting.

After the rate cut, EMIs may ease as the banks are likely to transfer the benefit to the consumers by reducing interest rates.

Repo rate is the rate at which the RBI lends money to the banks for a short term. Reverse Repo rate is the short term borrowing rate at which RBI borrows money from banks. This is the 3rd consecutive rate cut by the central bank. In its 1st and 2nd Bi-monthly policy statement announced in April and June respectively, RBI had also reduced repo rate by 25 basis points each.

“On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) at its meeting today decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 35 basis points (bps) from 5.75 per cent to 5.40 per cent with immediate effect. Consequently, the reverse repo rate under the LAF stands revised to 5.15 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 5.65 per cent” the RBI said in its 3rd bi-monthly policy statement.

“ The MPC also decided to maintain the accommodative stance of monetary policy. These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth” it added.


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