RBI cuts repo rate by 35 bps to 5.40%, reduces FY20 growth forecast to 6.9%

Repo rate is the rate at which the central bank lends money to the commercial banks, in case of any shortfall of funds.

The Reserve Bank of India's (RBI's) monetary policy committee (MPC) on Wednesday decided to reduce the repo rate by 35 basis points (bps) to 5.40 per cent to help revive the economy. It was the fourth straight rate cut by the central bank in 2019. The marginal standing facility (MSF) rate and the Bank Rate has been adjusted to 5.65 per cent.

Consequently, the reverse repo rate now stands at 5.15 per cent. The six-member committee lowered the FY20 GDP (gross domestic product) growth forecast to 6.9 per cent from 7 per cent, earlier. The central bank maintained its accommodative stance. 

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