Reserve Bank of India (RBI) Governor Sanjay Malhotra said that the central bank decided to reduce the policy repo rate by 50 basis points (bps) to 5.5 per cent with immediate effect. The central bank changed its stance from ‘accommodative’ to ‘neutral’, Malhotra mentioned.
He said that the standing deposit facility (STF) rate stands adjusted to 5.25 per cent whereas the marginal standing facility (MSF) rate and bank rate shall stand at 5.75 per cent.
“The Monetary Policy Committee met on June 4, 5, 6 to deliberate and decide on the policy repo rate and also the detailed assessment of the evolving macro-economic and financial developments and the economic outlook ahead. The MPC has decided to reduce the policy repo rate by 50 basis points to 5.5 per cent with immediate effect,” the RBI boss said.
The meeting was held in the backdrop of the promising start of the monsoon season in India, even as the global scenario continues to remain uncertain, Malhotra stated. He further said that after reducing repo rate by 100 bps in quick succession, monetary policy left with limited space to support growth.
With this, home loan rates are expected to go down, providing relief to homebuyers. Commenting on the move to slash repo rate, Sanjeev Sanyal said on X: “Excellent move.”
Gurmeet Chadha, managing director and CIO of wealth management firm Compcircle, said that the repo rate cut and change of stance to neutral indicates a positive and proactive approach by the RBI and MPC.
“RBI governor starts with good start to monsoon and global trade uncertainty.. Cuts 50 bps and also changes stance to neutral. I like this positive and proactive approach by RBI and MPC… transmission takes time Great call. RBI by far is the best central banker in the world,” Chadha wrote on X.
In April, the central bank reduced the repo rate by 25 bps to 6 per cent. The central bank changed its stance from ‘neutral’ to ‘accommodative’ at the time.
