In its sixth bi-monthly monetary policy meet, the Reserve Bank of India (RBI) cut the repo rate by 25 basis points to 6.25 percent. It has also changed the stance to neutral.
Additionally, the central bank has projected the GDP (gross domestic product) for 2019-20 at 7.4 percent. The inflation rate is estimated at 3.2-3.4 percent in the first half of the year 2019-20 and 3.9 percent in the third quarter of 2019-20.
Consumer Price Inflation (CPI) was projected at 2.8 percent in January-March and 3.2 to 3.4 percent in the April-September 2019 period. RBI Governor Shaktikanta Das said that lower food inflation had contributed to the headline inflation. It is expected to remain contained below or at its target of 4 percent. This is the present governor's first monetary policy announcement.
The Monetary Policy Committee's (MPC) decision to change the policy stance to 'neutral' was unanimous.
RBI Governor Das voted for rate cut. RBI member on the committee Michael Patra had changed his view from hawk to dovish. While RBI Deputy Governor Viral Acharya and Chetan Ghate of the Indian Statistical Institute voted against the rate cut decision which was approved by four votes in favour to two dissenting.