Repo Rate Cut by 50 Basis Points: RBI’s Diwali Gift

Repo Rate Cut by 50 Basis Points: RBI’s Diwali Gift

In a much awaited move, the Reserve Bank of India (RBI) cut the repo rate by 50 basis points from 7.25 per cent to 6.75 per cent with immediate effect.

Meanwhile, the apex bank kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liability (NDTL).

Further, RBI said, “On the basis of an assessment of the current and evolving macroeconomic situation, it has been decided to continue to provide liquidity under overnight repos at 0.25 per cent of bank-wise NDTL at the LAF repo rate and liquidity under 14-day term repos as well as longer term repos of up to 0.75 per cent of NDTL of the banking system through auctions.”

RBI will also continue with daily variable rate repos and reverse repos to smooth liquidity.

Consequently, the reverse repo rate under the LAF stands adjusted to 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 7.75 per cent, RBI said.

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