New Delhi:
The Reserve Bank of India has cut the repo rate by 25 basis points, making it 6 percent. This will reduce the cost of borrowing for banks and enable them to lend money to individual customers at low rates, lower EMI for loans. RBI Governor Sanjay Malhotra today said that the Monetary Policy Committee had unanimously voted to reduce the repo rate.
This is the second time this year when the Central Bank has cut the repo rate. Earlier, it had reduced the significant rate by 6.25 percent in February.
The repo rate, also known as the rate of procurement agreement, is the interest rate charged by RBI on the amount from commercial banks on the amount that lends them. So when it decreases, banks often benefit consumers.
The Governor of the RBI said that the financial year begins on a concerned note for the global economy and the central bank is monitoring inflation rising from global uncertainties. This comes a few days after the Donald Trump administration in the US imposed a mutual tariff on exports from India.
The RBI governor said, “Business friction will disrupt dental domestic development on global development. High tariffs may have an impact on net exports. India is engaged in a lot of frequent trade with US administration.” He said that now it is difficult to determine the effect of global development will be affected. But he said that the central bank was not worried about being able to manage domestic development.
The possibilities for the agriculture sector are bright and the manufacturing activity is showing symptoms of revival, he said. He said, “The service sector continues to show flexibility. Urban consumption is rapidly raising discretionary expenses,” he said, the balance sheets of banks and corporates are “healthy”.
The RBI Governor said that the Monetary Policy Committee had noted that inflation is currently below the target and there is a sharp decline in food prices.
The estimate of GDP development for this financial year has been cut in 20 basis points and the actual GDP growth is now estimated at 6.5 percent.
