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Reuters

The Reserve Bank of India cut its policy interest rate by 25 basis points in a widely expected move on Thursday, while also changing its monetary policy stance to “accommodative” after the economy grew at its slowest in over four years.
The six-member monetary policy committee (MPC) cut the repo rate – the level at which it lends to commercial banks – to 5.75 per cent as predicted by 44 of 66 analysts polled by Reuters last week. The reverse repo rate was reduced to 5.50 per cent.
The decision was predicted by 31 out of 43 economists surveyed by Bloomberg News.
All six of the MPC members voted for a 25 basis points cut, and for the policy stance to be changed to “accommodative” from “neutral”.




“A sharp slowdown in investment activity along with a continuing moderation in private consumption growth is a matter of concern,” the MPC said.
Markets reacted to the rate cut and change in stance as the 10-year benchmark bond yield fell to 6.89 per cent from 7 per cent before the policy announcement, while the rupee strengthened to 69.28 per US dollar from 69.36 earlier.
The Reserve Bank of India lowered its growth forecast to 7 per cent from the April view of 7.2 per cent for the 2019/20 April-March fiscal year.
Asia’s third largest economy grew at a much slower-than-expected 5.8 per cent annually in the January-March quarter, according to official data released on Friday, down from 6.6 per cent in the last quarter of 2018.
A sharp slowdown in investment activity along with a continuing moderation in private consumption growth is a matter of concern
India’s monetary policy committee
The announcement meant India had lost its place as the world’s fastest-growing major economy to China, which is currently on 6.4 percent growth.
Far quicker growth is needed to generate jobs for the millions of young Indians entering the labour market each month, posing the greatest economic challenge to Prime Minister Narendra Modi, as he begins his second term in office.
It was the third consecutive reduction under central bank governor Shaktikanta Das, a Modi ally who was appointed in December after his predecessor quit following a spat with the government over alleged interference.
Additional reporting by Agence France-Presse


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The Reserve Bank of India cut its policy interest rate by 25 basis points in a widely expected move on Thursday. Photo: EPA

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Economy

Global Economy

Economic Indicators

All six members of the Reserve Bank of India monetary policy committee agreed to cut the policy interest rate by 25 basis points to 5.75 per cent on Thursday
Central bank also changes its policy stance from ‘neutral’ after Asia’s third largest economy grew at just 5.8 per cent annually in the first quarter of 2019


All six members of the Reserve Bank of India monetary policy committee agreed to cut the policy interest rate by 25 basis points to 5.75 per cent on Thursday.


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