As crude oil price are decreasing continuously, today RBI decreased the Reverse Repo Rate by 25 basis points.
Impact
Interest rate will fall and fall in interest rates will lead to fall in Inflation rate.
Why RBI took this step
Due to continuous low crude oil prices, demand levels are decreasing. Low demand levels led to low rate of inflation. This is directly influencing the growth rate. That's why RBI decreased Reverse Repo Rate, RBI wants businessmen to take more loan and advances, produce more and thus help in improving slowing down economy.
Impact of Interest rate on Inflation
