RBI cuts repo rate by 25 bps

In line with the market expectations, the Reserve Bank of India on Tuesday cut repo rate by 25 bps to 6.25 per cent. All six members of the monetary policy committee reportedly voted in favour of cutting the rate.

In its policy statement, the central bank said the decision of the monetary policy committee was consistent with the accommodative stance of the monetary policy.

Tuesday’s policy review was Urjit Patel’s maiden announcement as RBI Governor.

The policy was announced in the afternoon against the existing practice of 11 am.

Earlier, former RBI Governor Raghuram Rajan had the final say on interest rate cut decisions. Patel now has to go by the advice of a newly set up six-member monetary policy committee (MPC). This is for the first time that decision-making on interest rates has shifted to the six-member panel which has equal representation from the RBI and the Government.