Jagran Josh Logo
  1. Home
  2.  |  
  3. Economy Current Affairs |  

Fourth Bi-monthly Monetary Policy Statement 2015-16 announced; Repo rate cut by 0.50 percent

Sep 30, 2015 10:06 IST

Fourth bi-monthly monetary policy statement 2015-16 was announced on 29 September 2015 by Raghuram Rajan, the Governor of Reserve Bank of India (RBI).

The monetary policy cut the repo rate, the rate at which RBI lends to commercial bank, by 0.50 percent from 7.25 percent to 6.75 percent with immediate effect.

As a result, the reverse repo rate, the rate at which RBI borrows from commercial banks, stands adjusted to 5.75 percent, and the marginal standing facility (MSF) rate and the Bank Rate to 7.75 per cent.

However, the cash reserve ratio (CRR) of scheduled banks was kept unchanged at 4 percent of net demand and time liabilities (NDTL).

Further, RBI will continue to provide liquidity under overnight repos at 0.25 percent 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 percent of NDTL of the banking system through auctions; and continue with overnight/term variable rate repos and reverse repos to smooth liquidity.

Comment

The RBI lowered the repo rate against the backdrop of deflationary tendencies-lowering inflation and decelerating nominal GDP-in the economy.

As the headline consumer price index (CPI) inflation reached its lowest level in August 2015 since November 2014, except high prices of onion and pulses, and is expected to reach 5.8 percent in January 2016 the RBI shifted its focus to augmenting supply side economic activity.

As a result, the repo rate was decreased by 50 basis points or 0.50 percent to give boost to the decelerating merchandise exports and increase the investor confidence on the Indianeconomy amidst sluggish growth trends across the world.

Now get latest Current Affairs on mobile, Download # 1  Current Affairs App

Is this article important for exams ? Yes25 People Agreed
Read more Current Affairs on: monetary policy , RBI , Reserve bank of India , repo rate , industry , inflation , deflation

DISCLAIMER: JPL and its affiliates shall have no liability for any views, thoughts and comments expressed on this article.

Latest Videos

Register to get FREE updates

    All Fields Mandatory
  • (Ex:9123456789)
  • Please Select Your Interest
  • Please specify

  • ajax-loader
  • A verifcation code has been sent to
    your mobile number

    Please enter the verification code below

Newsletter Signup
Follow us on
This website uses cookie or similar technologies, to enhance your browsing experience and provide personalised recommendations. By continuing to use our website, you agree to our Privacy Policy and Cookie Policy. OK