RBI cuts repo rates to 4.4%
At the time when the whole nation has been engulfed by the COVID-19 pandemic, the Reserve Bank of India (RBI) has reduced the repo rate by 75 bps to 4.4% on Friday. Taking note of the crisis and the resulting economic distress that could follow, the central bank advanced its monetary policy committee meeting and voted for sizable reduction for policy rate.
RBI Governor Shaktikanta Das said in a press conference in Mumbai, “The RBI is monitoring evolving market and macro economic situation. Our effort is to preserve macroeconomic stability.”
Besides this, the bank is also taking other measures to help the economy tide over this crisis: measures to infuse liquidity such as long term repo operation (LTRO) auction of Rs. 1 lakh crore of three years maturity; cash reserve ratio (CRR) has been cut by 100 bps for one year to 3%; reduction in marginal standing facility (MSF); and allowing all lending institutions three month moratorium for all term loans. The LTRO and MSF cut is expected to infuse Rs. 3.74 lakh crore while the CRR cut will release Rs 1.37 lakh crore liquidity.