The Reserve Bank of India (RBI) on Thursday kept the repo rate unchanged at the current 5.15 per cent level but revised gross domestic product (GDP) growth projection to 5 per cent from 6.1 per cent for the current financial year 2019-20.
The six-member monetary policy committee (MPC) headed by Governor Shaktikanta Das announced the decision after a three-day meeting. Earlier on February 7, April 4, June 6, August 7 and October 4, the central bank had reduced the key lending rate to infuse liquidity and push economic growth.
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Repo rate is the rate at which the RBI lends money to commercial banks. A repo rate cut allows banks to reduce interest rates for consumers and lowers equal monthly instalments on home loans, car loans and personal loans.
Despite easy monetary and fiscal policy, the economy slowed to 4.5 per cent in the July to September quarter from 5 per cent growth in the April to June quarter.
In the previous fiscal year 2018-19, the GDP grew by only 6.8 per cent, according to government data. This was mainly due to weak household spending, muted corporate investments, and a crippling slowdown in manufacturing and construction activity.
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