Third Bi-monthly Monetary Policy Statement, 2019-20 Resolution of the Monetary Policy Committee (MPC) Reserve Bank of India

India's Central Bank Reserve Bank of India announced on 6th August the IIIrd Bi-Monthly Monetary Policy wherein they announced an array of conventional and unconventional measures to boost slowing economic growth, including reducing the benchmark interest rate by an irregular 35 basis points (bps), its fourth rate cut this year.

The Reserve Bank of India’s six-member rate-setting panel on Wednesday cut the repurchase rate to 5.4%, the lowest in almost a decade and more than the 25bps cut expected by most economists. It also decided to retain the monetary policy’s current accommodative stance.

Central bank governor Shaktikanta Das told reporters that the monetary policy committee (MPC) was of the view that the “standard 25 basis point (cut) might prove to be inadequate in view of the evolving global and domestic macroeconomic developments. On the other hand, reducing the rate by, say, 50 basis points might be excessive, especially after taking into account the actions already undertaken".

Reducing the rate by 35bps was, therefore, viewed as balanced, Das said. This is the second-biggest rate cut in recent times after RBI reduced the repo rate by 50bps twice: once in April 2012 and next in September 2015.

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