Signaling a benign interest rate regime and an accommodative monetary policy stance, RBI cut key policy rate by 25 bps in the fourth Bi Monthly policy. With this the repo rate stands reduced to 6.25%, reverse repo rate stands at 5.75% and MSF rate at 6.75%.
This move was anticipated due to favorable domestic and global factors, viz, declining CPI inflation and an accommodative monetary stance by major Central Banks across the globe. Another notable aspect about the policy was total unanimity among all MPC members for a repo rate cut. More importantly, this was the first RBI policy announcement by an MPC. The rate cut could not have come at a more opportune time considering that U.S Federal Reserve stance has turned hawkish. Meanwhile, growth outlook has been retained at 7.6%. Overall, the stance of the policy is accommodative and pro-growth, while simultaneously acknowledging some upside risks to inflation.