Mumbai: The Reserve Bank of India (RBI) on Friday cut repo rate for the fifth consecutive time this calendar year to 5.15 per cent from the current 5.4 per cent in a bid to support government measures for boosting economic activity amid benign inflation.
The six-member monetary policy committee (MPC) headed by Governor Shaktikanta Das announced the decision after a three-day meeting. Earlier on February 7, April 4, June 6 and Aug 7, the central bank had reduced the key lending rate to infuse liquidity and push economic growth.
Repo rate is the rate at which the RBI lends money to commercial banks. A repo rate cut allows banks to reduce interest rates for consumers and lowers equal monthly instalments on home loans, car loans and personal loans.
India's economy grew by only 6.8 per cent in 2018-19, according to government data. GDP growth slumped lower to 5 per cent in the April to June quarter as against a 8 per cent in the year-ago period due to weak household spending, muted corporate investments, anda crippling slowdown in manufacturing and construction activity.
Industry leaders say a substantial cut in the repo rate and bank lending rates are needed to boost manufacturing and domestic demand for economic growth.