Full text of RBI policy: Repo rate cut by 25 bps to 6%

The MPC noted that inflation excluding food and fuel has fallen significantly over the past 3 months

economy news : The Reserve Bank of India on Wednesday cut its main policy rate by a quarter percentage point to a more than 6-1/2 year low after inflation slumped.

RBI cut its repo rate by 25 basis points to 6.00 per cent - the lowest since November 2010 - as a slump in food prices sent June consumer inflation to a more than five-year low of 1.54 per cent.

The MPC noted that some of the upside risks to inflation have either reduced or not materialised:

(i) the baseline path of headline inflation excluding the HRA impact has fallen below the projection made in June to a little above 4 per cent by Q4

(ii) inflation excluding food and fuel has fallen significantly over the past three months

(iii) the roll-out of the GST has been smooth and the monsoon normal. Consequently, some space has opened up for monetary policy accommodation, given the dynamics of the output gap. Accordingly, the MPC decided to reduce the policy repo rate by 25 basis points

Here is the full of text of 'Third Bi-monthly Monetary Policy Statement, 2017-18 Resolution of the Monetary Policy Committee (MPC) Reserve Bank of India':

On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary Policy Committee (MPC) decided to:

•reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 6.25 per cent to 6.0 per cent with immediate effect.

Consequently, the reverse repo rate under the LAF stands adjusted to 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.25 per cent......Read full article