MUMBAI: As expected, the RBI cut repo and reverse repo rate by 25 bps to 5.75 and 5.50 per cent respectively on Thursday. Interestingly, the central bank also set the rhythm for a rate easing cycle changing its stance from neutral to accommodative. It means, more rate cuts are in the offing in the coming quarters.
Following are the highlights of the second bi-monthly monetary policy announced by the RBI on Thursday:
* Repo rate reduced by 25 bps to 5.75 pc for third time in a row
* Reverse repo rate now stands at 5.50 pc, marginal standing facility (MSF) rate 6 pc
* RBI changes policy stance to accommodative from neutral
* Cuts GDP growth forecast to 7pc from 7.2 pc for FY20
* Raises retail inflation forecast for Apr-Sept to 3-3.1 pc and 3.4-3.7 pc in Oct-Mar
* Projects upward bias in food inflation in near term due to rising prices of food items
* Forecast risks to inflation trajectory from monsoon uncertainties, unseasonal spike in vegetable prices, crude oil prices, financial market volatility and fiscal scenario
* Waives RTGS and NEFT charges to promote digital transactions
* Sets up a panel to review ATM charges, fees levied by banks
* To issue draft guidelines for 'on tap' licensing of small finance banks by Aug
* Flags sharp slowdown in investments, moderation in private consumption growth as concern * All six MPC members voted in favour of 0.25 pc policy rate cut
* Average daily surplus liquidity in the system at Rs 66,000 crore in early June
* Foreign Exchange Reserves stood at USD 421.9 billion on May 31, 2019
* Next monetary policy statement on August 7