RBI Interest Rate Decision: This meeting of MPC was held between 3 to 5 December, in which after evaluating the current economic conditions, all the members voted in favor of reducing the rate.
RBI changed the repo rate
RBI Repo Rate: The Reserve Bank of India has announced a reduction in interest rates by 25 basis points (BPS) after the meeting of the Monetary Policy Committee. Announcing on Friday, Governor Sanjay Malhotra said that the repo rate has now reduced from 5.5% to 5.25%. As soon as this is implemented, there will be a reduction in the EMI of home, auto and personal loans. This meeting of MPC was held between 3 to 5 December, in which after evaluating the current economic conditions, all the members voted in favor of reducing the rate.
There was no change in the last meeting
Before this decision, in the last meeting held in October, RBI had not made any change in the interest rates and had kept the repo rate at 5.5%. This time there were differing opinions among experts regarding the change in rates. Many economists were expecting it to remain stable, while the industry believed that the current time was suitable for cuts. Given the strong GDP growth and controlled inflation rate, it was expected that the RBI would maintain its tight policy, but the mixed trend of economic indicators further intensified the debate.
What is the repo rate?
Repo rate is the rate at which the central bank provides loans to other banks. When this decreases, borrowing becomes cheaper for banks and they reduce the interest rates on loans given to customers. On the other hand, reverse repo rate is the interest rate that RBI gives on depositing the money left with the banks. Whereas CRR i.e. Cash Reserve Ratio is the ratio under which banks keep a part of their total cash deposited with the Reserve Bank so that the cash needs of the customers can be met in any emergency.
RBI’s decision to reduce the repo rate is expected to provide relief to the common people, especially those customers who are planning to take a loan or are already repaying the loan.
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