The Reserve Bank of India (RBI) on Thursday reduced the repo rate under the liquidity adjustment facility (LAF) by 25 basis point and also changed its stance to “neutral” from existing “calibrated tightening”. The repo rate, or the key interest rate at which the central bank lends short-term funds to commercial banks, now stands at 6.25 per cent, as predicted by only 21 of 65 analysts polled by news agency Reuters. Most polled respondents had expected the central bank to only change the stance, to neutral.
Consequently, the reverse repo rate under the LAF now stands adjusted to 6 per cent, and the marginal standing facility (MSF) rate and the bank rate to 6.5 per cent, said the RBI in its sixth bi-monthly policy statement for 2018-19.
Today’s RBI policy statement is the first under Governor Shaktikanta Das, who took charge in December last year.
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.