Reserve Bank of India Governor Raghuram Rajan announced a repo rate cut of 25 basis points to 6.50 per cent on Tuesday in its monetary policy review as widely expected. However, the central bank kept the cash reserve ratio (CRR) unchanged at 4 per cent.
Below are the highlights from RBI Governor Raghuram Rajan’s speech
– cuts repo rate cut of 25 basis points to 6.50 per cent
– keeps CRR unchanged at 4 per cent
– expects CPI inflation to remain around 5% in 2016-17
– expects economy to grow by 7.655 in FY17
– cuts minimum daily maintenance of CRR to 90 per cent from 95 per cent
– liquidity conditions stressed by govt’s cash accumulation
– narrows policy rate corridor to +/- 50 bps from +/- 100 bps
– Reverse repo – or the rates lenders charge to the central bank – was hiked by 25 basis points to 6.0 per cent
– Sensex fell over 250 points immediately after RBI announced a rate cut of 25 bps
– RBI will remain accommodative in its policy stance going forward
– to release guideline on tap licensing for banks
– RBI sees 7th pay commission impact on inflation at 100-150 bps over the next two years
– Narrowed interest rate corridor
– announced open market operations of Rs 15,000 cr
– Borrowing is significantly cheaper now and will continue to do so, says Raghuram Rajan
How repo rates and reverse repo rates have changed so far
