RBI cuts key lending rate by 25 bps to 5.75%

NEW DELHI: For the third time in a row, the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) today cut interest rates by 25 basis points, as was widely expected.

At the end of a three-day MPC meeting, RBI Governor Shaktikanta Das announced its second bi-monthly monetary policy statement for 2019-20. In a unanimous decision, the MPC also decided to change the stance of monetary policy from neutral to accommodative.

Amid slowing economic growth and rising global uncertainty, the RBI had decreased the short-term lending rate (repo rate) by 25 basis points each in its last two policy reviews.

Besides, the RBI changed the monetary policy stance from neutral to accommodative.

Accordingly, the lower repo, or short-term lending rate for commercial banks, will reduce interest cost on automobile and home loans, thereby ushering in growth.

The decision to reduce the repo rate was taken by the RBI's Monetary Policy Committee (MPC) at its second monetary policy review of the current fiscal.