Today Reserve Bank of India made a higher than expected reduction in Repo Rate by 35 base points as benign inflation provides the central bank room to help an economy that is growing at its slowest in nearly five years. This is the fourth time the RBI has cut repo rate this year and its the lowest in the last 9 years.
Four members (Ravindra H. Dholakia, Michael Debabrata Patra, Bibhu Prasad Kanungo and Shaktikanta Das) voted to reduce the policy repo rate by 35 basis points, while two members (Chetan Ghate and Pami Dua) voted to reduce the policy repo rate by 25 basis points.
Repo rate is the rate at which the Reserve Bank lends money to the commercial banks, in case of any shortfall of funds. The rate cut has sent a strong signal to domestic banks to cut lending rates before the festive season start in September.
