RBI Cuts Repo Rates For Fifth Time This Year To Boost Ailing Growth, Slashes GDP Growth Forecasts
The repo rate, at which it lends to the system, has been brought down to 5.15 per cent to help reduce borrowing costs for home and auto loans, which are now directly linked to this benchmark.
With first quarter GDP growth plunging to 5 per cent, the RBI cut its estimate of economic growth in the current fiscal to 6.1 per cent from its earlier estimate of 6.9 per cent.
Besides, the Reserve Bank has also reduced India's economic growth forecast to 6.1 per cent for 2019-20 due to a continued weak consumer sentiment along with subdued global markets. The RBI's monetary policy committee (MPC) in its fourth policy review of the current fiscal reduced the growth rate to 6.1 per cent from 6.9 per cent in FY2019-20.
The six-member MPC headed by Governor Shaktikanta Das announced the decision after a three-day meeting. Earlier on February 7, April 4, June 6 and Aug 7, the central bank had reduced the key lending rate to infuse liquidity and push economic growth.
India's economy grew by only 6.8 per cent in 2018-19, according to government data. GDP growth slumped lower to 5 per cent in the April to June quarter as against a 8 per cent in the year-ago period due to weak household spending, muted corporate investments, and a crippling slowdown in manufacturing and construction activity.
Industry leaders say a substantial cut in the repo rate and bank lending rates are needed to boost manufacturing and domestic demand for economic growth.
(with inputs from agencies)
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