Reserve Bank cuts repo rate by 35 bps

The central bank of India cut key policy rates during its monetary policy meeting on Wednesday. Reacting to this development, the Nifty Bank gained more than 100 points, but later slipped to trade at 28,075.30, up by 53.20 points or 0.19 per cent.

The benchmark indices dipped after the announcement. The BSE Sensex was at 36,943.17, down by 33.68 points or 0.09 per cent, while Nifty50 was at 10,931.05, down by 17.20 points or 0.16 per cent, at 12:10 hours.

The Reserve Bank of India (RBI) cut Repo Rate by 35 basis points to 5.40 per cent. Reserve Repo Rate is adjusted to 5.15 per cent. The Monetary Policy Committee (MPC) maintained a accommodative stance. Four members of MPC Shaktikanta Das, Ravindra Dholakia, Michael Debabrata Patra and Bibhu Prasad Kanungo voted to reduce the repo rate by 35 bps, while two members; Chetan Ghate and Pami Dua voted to 25 bps cut.

The committee cut the GDP growth outlook for FY20 from 7 per cent to 6.9 per cent. The RBI statement said that domestic economy activity, private consumption and investment activity remained sluggish, even as global slowdown and trade tensions pose downside risk to the economy.