RBI slashes Key Policy Rates

Reserve Bank of India (RBI) cut its policy interest rate. Lets Know more about it.

RBI's Current Policy Rate
  • On Tuesday, The Reserve Bank of India cut its policy interest rate to a 4 - 1/2 year low of 6.75%.
  • It is deemed as bigger than expected move.
  • By cutting 50 basis point to a four year low of 6.75%, the effect is that commercial banks to reduce their loan rates faster.
  • This is the fourth cut rate since January 2015.

RBI Policy Rates
Current Previous
Repo Rate 6.75% (w.e.f. 29/09/2015) 7.25% (since 02/06/2015)
Reverse Repo Rate 5.75% (w.e.f. 29/09/2015) 6.25% (since 02/06/2015)
Marginal Standing Facility 7.75% (w.e.f. 29/09/2015) 8.25% (since 2/6/2015)
Bank Rate 7.75% (w.e.f. 29/09/2015) 8.25% (since 2/6/2015)
CRR 4% (w.e.f. 09/02/2013) 4.25% (since 30/10/2012)
SLR 21.5% (w.e.f. 03/02/2015) 22% (since 09/08/2014)

Key Features:

New RBI Monetary Policy is seems to be better because following are some areas in which reforms has been seeking:
  • After changes in RBI's monetary policy Global Growth has moderated especially in emerging market economies (EMEs), 
  • Further global trade has deteriorated 
  • Increment in downside risks to growth.
  • Slowing global trade volumes, depressed commodity prices, weakening currencies and capital outflows in EMEs.
  • It is expected that Exports will be grown up.
  • Reduce Inflation.
  • GDP decrease from 7.6% to 7.4% due to slower global growth, lack of investment in the private sector and constraints in bank lending etc.
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