The Reserve Bank of India today cut the repo rate by 25 basis points to 6 per cent as was widely expected. Repo rates are interest rates at which the RBI lends money to banks and any drop in these rates signals a lowering of interest rates.
Today's cut in interest rates could also bring down interest rates on loans across the board. We could now see a cut in interest rates across home loans, auto loans etc.
The country's central bank has also cut the reverse repo rates to 5.75%. "The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium -term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth," the central bank said in its statement.