The Reserve Bank of India in its 3rd bi-monthly monetary policy decision of FY 2017-18 today reduced the Repo Rate under the Liquidity Adjustment Facility by 25 basis points from 6.25% to 6.0%, citing reduction in upside risk to inflation.
This move is expected to lower EMIs for home, auto and personal loans. This is the first rate cut since October 2016 and the interest rate is now at 6-year low. In line with record low retail inflation, the reverse repo rate under the LAF stands adjusted to 5.75%, and the marginal standing facility (MSF) rate and the Bank Rate to 6.25%.
The RBI Governor headed, six member Monetary Policy Committee also decided to keep the policy stance neutral in consonance with the objective of achieving the medium-term target for consumer price index inflation of 4%. It stressed on urgent need to reinvigorate private investments, clear infrastructure bottlenecks and provide a major thrust to the Pradhan Mantri Awas Yojana.
RBI said that it is working in close coordination with the government to resolve large stressed corporate borrowings and recapitalize public sector banks.