The Reserve bank of India in its bi-monthly monetary policy review today reduced the repo rate by 25 basis points to 5.75 per cent from 6.0 per cent with immediate effect. Consequently, the reverse repo rate stands adjusted to 5.50 per cent, and the marginal standing facility rate and the Bank Rate to 6.0 per cent.

The six-member Monetary Policy Committee headed by RBI Governor Shaktikanta Das also unanimously decided to change the stance of monetary policy from neutral to accommodative.
Talking to AIR, Chief Economist of PHD Chamber of Commerce S P Sharma termed the move as a positive step.

Taking into account the weak global demand due to the escalation in trade wars and weakened private consumption in rural areas, Mr Das informed that the RBI has lowered the GDP growth forecast for 2019-20 to 7 percent from 7.2 percent.

With a view to boosting digital transactions, RBI has decided to do away with charges levied on RTGS and NEFT transactions and banks will be required to pass this benefit to their customers. The next meeting of the MPC is scheduled from August 5 to 7.

The industry body has welcomed the RBI decision of reducing the repo rate by 25 basis points to 5.75 per cent from six per cent.

President of FICCI Sandip Somany said this rate cut will encourage banks to lower their lending rates for both retail and corporate credits. He said, reviving business confidence and consumer confidence in the economy is the need of the hour.

ASSOCHAM President Mr B K Goenka said the measures will rekindle economic growth and improve business sentiments. Mr Goenka further said the credit policy resolution and the RBI Governor’s emphasis on faster and higher transfer of rate cuts will be reassuring if done by the banks.