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RBI cuts repo rate by 25 basis points

The Reserve Bank of India’s Monetary Policy Committee reduced the repo rate by 25 basis points while switching its policy stance from neutral to accommodative. The reverse repo rate under the Liquidity Adjustment Facility has been adjusted to 5.50%, and the marginal standing facility (MSF) rate and the Bank Rate to 6%.

The meeting comes at the heels of India’s Q4, FY 2018-19 GDP growth rate contracting to 5.8%, the lowest in the last five years. Additionally, there has been a liquidity crunch for the past few months. This is the third successive rate cut by the RBI  this year.