RBI Reduces Key Interest Rate By 25bps, Markets Volatile

RBI Reduces Key Interest Rate By 25bps, Markets Volatile

In line with market expectations, the Reserve bank of India (RBI), its first bi-month Monetary Policy Committee meeting on Thursday, reduced key benchmark policy rates by 25bps to 6.00%, in a 4-2 split vote on Thursday. The repo-rate, at which commercial banks borrow from the RBI, now stands at 6%.  The RBI expressed that it does not expect inflation to cross 3.8% in FY20. The RBI adjusts the reverse-repo-rate to 5.75% and Marginal Standing Facility (MSF) bank rate adjusts to 6.25%

RBI Governor Shaktikanta Das said that India’s Gross Domestic Product (GDP) is expected to be at 6.8% to 7.1% in the first half of FY-20 and at 7.3% to7.4% in the second half of FY-20.

Soon after the rate-cut announcement, the share benchmark indices plunged further and the BSE Sensex was at 38,740-level, down by 136points at around 12:00 hours, while the Nifty50 was trading 11,616-level, down by 27points and Nifty Bank was quoting 30,021 down by 0.24%.

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