MUMBAI: The Reserve Bank of India on Friday cut the key policy rate to its lowest levels in nearly a decade, stepping up its efforts to kickstart an economy growing at its slowest pace in six years.
The central bank, which also sharply trimmed its 2019-20 growth forecast, said that it will maintain its “accommodative” policy stance “as long as it is necessary” to revive growth, and ensure inflation remains within target.
The six-member Monetary Policy Committee (MPC) cut the repo rate INREPO=ECI by 25 basis points to 5.15%, for a fifth straight meeting this year and in line with expectations in a Reuters poll. The reverse repo rate INRREP=ECI was reduced to 4.9%.
And markets expect further easing after Friday’s reduction, with the RBI seen delivering another 15-basis point cut at its December policy, before an extended pause, according to a Reuters poll conducted before the policy review.
With the protracted Sino-U.S. trade war raising the risk of a global recession, central banks around the world – including the U.S. Federal Reserve and the European Central Bank – have ramped up monetary support in recent months.
India’s cumulative rate cuts totalling 135 bps make it the most aggressive central bank in Asia. The RBI’s repo rate is now at its lowest levels since March 2010, when it stood at 5%, following the global financial crisis.
