Poonam Nath

RBI slashed the repo rate, by 50 basis points to 5.5%; relief for EMI payers

Digital Desk: The Reserve Bank of India (RBI) has cut its benchmark lending rate, known as the repo rate, by 50 basis points to 5.5% as inflation falls within its comfort zone. 

The decision was unanimously made at the bi-monthly Monetary Policy Committee (MPC) meeting on June 4-6, which was chaired by RBI Governor Sanjay Malhotra.

Borrowers who might anticipate lower EMIs for long-term loans will be relieved by this, and homebuyers may find it especially helpful.

The Indian economy is doing well despite global uncertainty, according to RBI Governor Malhotra. The country's strength is linked to its solid balance sheets in five primary areas, which present numerous opportunities for both domestic and foreign investment.

The RBI also predicted retail inflation of 3.7% for the current fiscal year, compared to 4% in April. According to government figures, it dipped to 3.16% in April from 3.34% in March, maintaining within the RBI's acceptable range.

The RBI maintained its 6.5% Gross Domestic Product (GDP) growth forecast for the current fiscal year. The quarterly predictions are as follows: 2.9% from April to June, 3.4% from July to September, 3.9% from October to December, and 4.4% from January to March.

The central bank also cut the cash reserve ratio (CRR) by 100 basis points and stated that it would release Rs 2.5 lakh crore of bank funds. CRR is the percentage of total deposits that banks must keep in liquid form with the RBI.

During the current fiscal year, the RBI maintained its 6.5% GDP growth forecast. 2.9% for April–June, 3.4% for July–September, 3.9% for October–December, and 4.4% for January–March are the quarterly estimates.

Along with lowering the cash reserve ratio (CRR) by 100 basis points, the central bank said that it would release bank money totaling Rs 2.5 lakh crore.

The RBI cut the repo rate by 25 basis points at its last MPC meeting in April, reducing it from 6.25% to 6%.