Mumbai: The Reserve Bank of India on Wednesday reduced repo rate by 35 basis points to 5.40 pc from 5.75 pc with immediate effect.
Announcing a third bi-monthly policy, RBI Governor Shaktikanta Das said the reverse repo rate under the Liquidity Adjustment Facility (LAF) stands revised to 5.15 pc, and the Marginal Standing Facility (MSF) rate and the Bank Rate to 5.65 pc.
This was the fourth rate cut in a row of its key policy rate since Mr. Das took over as the Governor of the central bank in December last year.
The path of Consumer Price Index (CPI) inflation is now projected at 3.1 pc for the second quarter of FY20 and 3.5-3.7 pc for the second half of FY20, with risks evenly balanced, the RBI governor said.
The CPI inflation for the first quarter of FY21 is projected at 3.6 pc. The MPC also revised downwards GDP growth for FY20 from 7 pc in the June policy to 6.9 pc in August in the range of 5.8-6.6 pc for the first half of FY20 and 7.3-7.5 pc for the second half, with risks somewhat tilted to the downside. GDP growth for the first quarter of FY21 is projected at 7.4 pc.
Addressing growth concerns by boosting aggregate demand, especially private investment assumes the highest priority at this juncture while remaining consistent with the inflation mandate, it said.