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Loans May Get Cheaper As Shaktikanta Das-Led RBI Cuts Key Lending Rate

Loans May Get Cheaper As Shaktikanta Das-Led RBI Cuts Key Lending Rate

RBI Governor Shaktikanta Das said the decision to change the policy stance was unanimousIn a surprise move, the Reserve Bank of India (RBI) on Thursday reduced the repo rate by 25 basis points or 0.25 per cent. The central bank also changed its policy stance to “neutral” from existing “calibrated tightening”. The reduction in repo rate may lead to lower EMIs for auto and car loan borrowers, say analysts. The repo rate – which is the key interest rate at which the RBI lends short-term funds to commercial banks – now stands at 6.25 per cent.Here are five things to know:

  1. The reverse repo rate now stands adjusted to 6 per cent, and the marginal standing facility (MSF) rate and the bank rate to 6.5 per cent, the RBI said in its sixth bi-monthly policy statement for 2018-19.
  2. The decision by the central bank to reduce the repo rate was in line with 21 of 65 analysts polled by news agency Reuters. 
  3. According to a January 24 Reuters poll, two-thirds of 65 economists expected the RBI to hold the repo rate at 6.50 per cent, while most respondents predicted the MPC to switch to a neutral stance. Nearly half of respondents expected a 25 basis point rate cut by mid-2019, according to the Reuters poll.
  4. Today’s RBI policy statement is the first under Governor Shaktikanta Das, who took charge in December last year.
  5. Mr Das took office nearly a week after the last policy meet on December 5 by his predecessor Urjit Patel. The RBI has maintained status quo on the key rates in the October and December policy reviews.