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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%.