On Thursday, February 7, the Reserve Bank of India (RBI) declared a cut down in the repo rate. RBI stated that the repo rate has been reduced by 25 points, bringing it to 6 per cent from 6.25 per cent. Earlier, RBI had brought down the repo rate in August 2017 but later the repo rate kept on increasing.
After the announcement from RBI, it is expected now that the home loans will get cheaper and the EMIs for the same will drop down.
In his maiden policy review, RBI Governor Shaktikanta Das said that the estimated growth rate for the financial year 2019-20 is expected to be 7.4 per cent whereas the estimate for the financial year 2018-19 has been kept at 7.2 per cent. He also added that the estimated inflation rate for 2019-20 will be set between 3.2 to 3.4 per cent.
Meanwhile, Das also mentioned that the farmers will be benefited as they will now receive interest-free loan for up to ₹1.60 lakh from RBI.
The rate at which the RBI lends to commercial banks is called the repo rate. In case of inflation, the central bank tends to increase the repo rate, thus discouraging banks to borrow and reducing the money supply in the economy.
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