RBI cuts repo rate to 5.15%; GDP growth estimate lowered to 6.1%

The Reserve Bank of India on Friday cut its key rates by 0.25 per cent to boost the economy from a six-year low, saying reduction was necessary to revive growth. With first-quarter GDP growth plunging to 5 per cent, the RBI cut its estimate of economic growth in the current fiscal to 6.1 per cent from its earlier estimate of 6.9 per cent. The repo rate, the rate at which it lends to the system, has been brought down to 5.15 per cent to help reduce borrowing costs for home and auto loans, which are now directly linked to this benchmark. The reverse repo rate was reduced to 4.9 per cent.This is the fifth straight cut in rates by the Reserve Bank in as many policy reviews in 2019, and takes the total quantum of reductions to 1.35 per cent. The RBI maintained its “accommodative” stance and declared it would maintain this stance as long as it was necessary to boost growth.