The Reserve Bank of India Monetary Policy Committee has decided to reduce its key lending rates by 0.25% to bring the repo rate down to 6%.This is the RBI’s second such reduction in as many months. The measure is expected to bring down EMIs for personal, home and car loans apart from boosting the economy, here’s more

As anticipated by markets and experts, the Reserve Bank of India has slashed repo rate for a second time in as many months.After a 2-day meet, the six-member Monetary Policy Committee headed by RBI Govenor Shaktikanta Das, cut the repo rate by 25 basis points to a one-year low of 6 per cent and reverse repo rate to 5.75 per cent on prospects of benign inflation. 4 of the 6 MPC members favoured the cut, 2 favoured status quo.

Reduction is repo rate makes it less costly for banks to borrow from the central bank. It’s expected that banks will pass on benefits to their borrowers in both the retail and corporate spheres.

It was also indicated that though the RBI had asked banks to start using external benchmarks in December last year while disbursing personal or retail loans on floating rates starting the 1st of April. The move has been put off for now. The MPC has also said that the demostic economy faces challenges. The situation requires close monitoring till the next MPC meet in June.