<p>The Reserve Bank, in its second bi-monthly monetary policy review, announced the third consecutive rate cut, dragging the repo rate to its lowest level since July 2010.<br /><br />Here are five key takeaways from the policy.</p>.<p><strong>1) Repo Rate:</strong> The policy repo rate has been reduced under the liquidity adjustment facility (LAF) by 25 basis points to 5.75% from 6.0%. The rate at which RBI lends these finances to commercial banks is called the repo rate. The MPC voted unanimously in favour of the rate cut.</p>.<p><strong>2) Reverse Repo Rate:</strong> The reverse repo rate under the LAF stands adjusted to 5.50%, and the marginal standing facility (MSF) rate and the Bank Rate to 6.0%. Reverse Repo rate is the rate at which Reserve Bank of India borrows funds from all the other commercial banks in the country.</p>.<p><strong>3) Policy Stance:</strong> In <b>a</b> unanimous decision, the MPC also decided to change the stance of monetary policy from neutral to accommodative, after the economy grew at its slowest in over four years.</p>.<p><strong>4) Inflation:</strong> Raises retail inflation forecast for Apr-Sept to 3-3.1 pc and 3.4-3.7 pc in Oct-Mar. The RBI decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth.</p>.<p><strong>5) Growth Estimates:</strong> GDP growth forecast has been lowered from 7.2% to 7% for FY20 due to slowdown in domestic activities and escalation in global trade war.</p>
<p>The Reserve Bank, in its second bi-monthly monetary policy review, announced the third consecutive rate cut, dragging the repo rate to its lowest level since July 2010.<br /><br />Here are five key takeaways from the policy.</p>.<p><strong>1) Repo Rate:</strong> The policy repo rate has been reduced under the liquidity adjustment facility (LAF) by 25 basis points to 5.75% from 6.0%. The rate at which RBI lends these finances to commercial banks is called the repo rate. The MPC voted unanimously in favour of the rate cut.</p>.<p><strong>2) Reverse Repo Rate:</strong> The reverse repo rate under the LAF stands adjusted to 5.50%, and the marginal standing facility (MSF) rate and the Bank Rate to 6.0%. Reverse Repo rate is the rate at which Reserve Bank of India borrows funds from all the other commercial banks in the country.</p>.<p><strong>3) Policy Stance:</strong> In <b>a</b> unanimous decision, the MPC also decided to change the stance of monetary policy from neutral to accommodative, after the economy grew at its slowest in over four years.</p>.<p><strong>4) Inflation:</strong> Raises retail inflation forecast for Apr-Sept to 3-3.1 pc and 3.4-3.7 pc in Oct-Mar. The RBI decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth.</p>.<p><strong>5) Growth Estimates:</strong> GDP growth forecast has been lowered from 7.2% to 7% for FY20 due to slowdown in domestic activities and escalation in global trade war.</p>
