The Reserve Bank of India (RBI), on April 4, 2019, cut the benchmark interest rate by 0.25% for the second time in a row, to bring the interest rate to the lowest level in one year, on softening inflation. The central bank, however, kept the monetary policy stance at ‘neutral’.
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The benchmark interest rate was cut by 0.25% to 6%, in a move that will result in lower cost of borrowing for banks that are expected to transmit the same to individuals and corporates. The rate cut is in consonance with achieving the medium-term objective of maintaining inflation at the 4% level, while supporting growth, the RBI said in a statement.
In the second policy review under governor Shaktikanta Das, the six-member Monetary Policy Committee voted 4:2 in favour of the rate cut. The RBI had, on February 7, 2019, last cut the interest rate to 6.25% from 6.5%. The last time the repo rate stood at 6% was in April 2018.
