RBI cuts key rate; expect lower EMIs on home, car and personal loans

Mumbai, Aug 2 (PTI): The Reserve Bank of India on Wednesday lowered the benchmark lending rate by 25 basis points to six per cent, citing a reduction in upside risk to inflation.

cut in the benchmark lending rate, the RBI’s first since October 2016, takes it to a six-year low, and is expected to nudge down monthly payments for retail loans.

In line with record low retail inflation, the Monetary Policy Committee, headed by RBI Governor Urjit Patel, cut the policy repo rate by 25 basis points to six per cent and the reverse repo by a similar amount to 5.75%.

The MPC has also decided to keep the policy stance neutral and to watch incoming data with a view to keeping headline inflation close to four per cent.

The MPC stressed the urgent need to reinvigorate private investments, clear infrastructure bottlenecks and provide a major thrust to the Pradhan Mantri Awas Yojana.

The RBI said it is working in close coordination with the government to resolve large stressed corporate borrowings and recapitalise public sector banks.