The six-member Monetary Policy Committee (MPC) of the Reserve Bank of India reduced the repo rate for third straight policy meeting by 25 basis points to 5.75% to address growth concerns. The stance of the policy has also been changed from neutral to accommodative. The decision to reduce the interest rate was unanimous.
“The MPC notes that growth impulses have weakened significantly as reflected in a further widening of the output gap compared to the April 2019 policy,” the RBI said.
The RBI has revised GDP growth projection for the current financial year from 7.2% to 7%. “The path of CPI inflation is revised to 3.0-3.1% for H1:2019-20 and to 3.4-3.7 % for H2:2019-20, with risks broadly balanced,” the RBI said.