Mumbai: Slashing benchmark lending rates for the third time this year, the Reserve Bank of India cut its repo rate by 0.25 per cent today and said its future monetary policy stance will be more accommodative.
Amid concerns of a slow down in the economy, the central bank lowered its gross domestic product (GDP) forecast to 7 per cent for the current fiscal from 7.2 per cent projected earlier. The repo rate, at which the the central bank lends to the system, will come down to 5.75 per cent after the cut.
While marginally increasing its inflation projection to 3-3.1 per cent for the first half of the fiscal year 2019-20, which is within the comfort range of 2-6 per cent set by the government, RBI cut the GDP growth targets sharply to 7 per cent for FY20 on weak global scenario and dip in private consumption.
“The MPC (monetary policy committee) notes that growth impulses have weakened significantly. A sharp slowdown in investment activity along with a continuing moderation in private consumption growth is a matter of concern,” read the policy resolution.