RBI cuts repo rate to 6.75%

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RBIThe Reserve Bank of India (RBI) cut its key lending rate—the repo rate— to 6.75 percent from 7.25 percent.

This is the third rate cut by RBI. The central bank had cut the repo rate by 25 basis point cut earlier in January and March.

The statutory liquidity ratio (SLR) and the cash reserve ratio (CRR) have been kept unchanged.

The Government welcomed RBI’s decision to reduce the repo rate.

Finance Minister Arun Jaitley said,”Constant vigilance is warranted on the inflation front, this action signals that inflationary pressures have moderated significantly and are within the RBI’s comfort zone.”

He said that the Government is committed to meet its fiscal deficit target to consolidate the gains achieved in reducing the inflation.

The Minister further said that the rate cut, combined with actions taken and planned by the Government, will help boost confidence and investment, and help realize the economy’s medium-term potential growth rate.

Indian corporates would now be able to raise External Commercial Borrowings (ECB) through rupee denominated offshore bonds with no end use restrictions. This would provide additional source of raising resources which would be fully hedged as they are denominated in rupees.

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