Key highlights of monetary policy statement:
- On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 35 basis points (bps) from 5.75 % to 5.40 % with immediate effect.
- Consequently, the reverse repo rate under the LAF stands revised to 5.15 %, and the marginal standing facility (MSF) rate and the Bank Rate to 5.65 %.
- The MPC also decided to maintain the accommodative stance of monetary policy.
Comment:
- The move is said to give a fillip to the economy. This was the fourth consecutive time that the Monetary Policy Committee reduced the rates.
- These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 % within a band of +/- 2 %, while supporting growth.
