RBI Cuts Repo Rate

Repo rate cut by RBI

Courtesy : Moneycontrol

The Reserve Bank of India has announced the long awaited rate cut. It has reduced the repo rate by 50 basis points to 5% and cut the reverse repo rate by 50 basis points to 3.5% with immediate effect.

The Q3 GDP numbers had come in lower than market expectations at 5.3% and analysts had expected the dismal GDP number to pressurise the Reserve Bank of India (RBI) to further cut rates. 

However, when the RBI Governor D Subbarao had met with leading bankers on February 27 to discuss the prevailing economic and credit condition, they informed him that liquidity was at a comfortable level and any rate cut by the central bank would not translate into a lending rate cut by the banks.