RBI cuts key interest rate by 25 basis points to 6%

The RBI has reduced the key policy rate or the repo rate by 25 basis points (bps) to 6% in its third monetary policy review on Wednesday, as retail inflation softened.

This is the second rate cut by the Monetary Policy Committee (MPC) since its inception in October.

“The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band



of +/- 2%, while supporting growth,” the RBI said.

As a result of the repo rate cut, the reverse repo rate is adjusted to 5.75%, and the Marginal Standing Facility (MSF) rate and the Bank Rate to 6.25%.

Among the MPC members, Chetan Ghate, Pami Dua, Viral V. Acharya and Urjit R. Patel were in favour of the monetary policy decision, while Ravindra H. Dholakia voted for a policy rate reduction of 50 basis points and Michael Debabrata Patra voted for status quo.