For the fifth time this year, the Reserve Bank of India announced last Friday that it’s going to cut its repo rate. The repo rate, also known as key lending rate, was slashed by 25 basis points last week.
The repo rate was reduced by 5.15%, and overall it declined 135 basis points or 1.35%. Meanwhile, the reserve repo rate still stands at 4.90%.
According to the Reserve Bank of India, it is maintaining an “accommodative” stance. RBI governor Shaktikanta Das added that the bank will continue to hold its stance as long as it needs to revive growth.
With the first-quarter GDP growth recording a reading of 5%, the RBI cut is estimated to help support economic growth.
Aside from the repo cut, the Reserve Bank of India also reduced its growth forecast for the current fiscal year. Reports say that the bank now only expects 6.1% instead of earlier expectations of 6.9%.
The Monetary Policy Committee (MPC) of the Reserve Bank of India announced the slash and forecast after their three-day meeting.
Inflation, the key mandate of the central bank, is expected to grow by 4% in the medium term. And MPC also moved its expectations up by 3.6% for the September quarter.
However, the projection for the second half of the fiscal year remains at 3.5% to 3.7%.
The next meeting of the RBI Monetary Policy Committee is scheduled on December 3 to 5 2019.
How Did the Rupee Do in Sessions?
After the news from the Reserve Bank of India, the rupee gained strength in Friday’s sessions.
Last week, the Indian rupee gained against the US greenback, Chinese yuan, and the euro.
The USD INR trading pair lost 0.14%, or 0.096 points, and traded for ₹70.924 last week. While the EUR INR exchange rate slipped by 0.07%, or 0.0545 points, and traded for ₹77.8115 in sessions.
And lastly, the INR CNY pair went up by 0.20%, or 0.0002 points, and has exchanged for ¥0.1009 in Friday’s trading.