The Reserve Bank of India (RBI) Monetary policy committee led by RBI Governor Shaktikantadas cut the repo rates for the fourth time in a row this year on Wednesday.

All the members of the monetary policy committee in its third review meeting in the current fiscal unanimously voted to reduce the repo rate and to maintain the accommodative stance of Monetary policy.

The Reserve bank also lowered the GDP growth rate to 6.9 percent from the previous estimate of 7 percent. The committee said the decision to cut repo rate by 35 basis points was taken in the light of various indicators suggesting weak domestic and external demand conditions.

The committee said that the easing of the repo rate since February this year has had some impact and is expected to boost the economic activity.

Repo rate is the rate at which RBI lends to banks and reverse repo rate is the rate at which it borrows from the banks. The RBI regulates the liquidity situation in the country while aiming to maintain the inflation at the prescribed level.

“The decision of the committee was in consonance with the objective of achieving the medium term target for Consumer Price Index (CPI) Inflation of 4 percent within the range of +/- 2 percent,” said the Reserve Bank in its monetary policy statement.

The latest cut in the Repo rate announced by the RBI are supposed to be passed on to the customers by the banks. The proposed cut will reflect in the interest rates on home, auto, personal or other loans.  

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