RBI cuts repo rate by 25 basis points

Reserve Bank of India (RBI) has today (Feb 7)announced its sixth Bi-Monthly Monetary Policy Rates for 2018-19 in Mumbai. The Monitory Policy Committee (MPC) of Reserve Bank of India On the basis of an assessment of the current and evolving macroeconomic situation at its meeting decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 6.5 per cent to 6.25 per cent with immediate effect. The MPC also decided to change the monetary policy stance from calibrated tightening to neutral.

The revised key policy rates are as under.

* RBI has decided to reduce statutory liquidity ratio, the portion of funds which banks are required to park in treasury bills and other instruments, by 0.25% every quarter beginning January. The calibrated reduction in statutory liquidity ratio (SLR) will continue till it reaches 18%.The first reduction of 25 basis points taken effect in the quarter commencing January 2019.

The decision of the MPC is consistent with the neutral stance of monetary policy 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.