All about RBI Monetary Policy.
                     All about RBI Monetary Policy
RBI’s new monetary policy
 The Reserve Bank of India reduced repo rate by 
40 basis points to 4 per cent in an effort to 
further boost liquidity in the economy which 
has been reeling under the impact of COVID-19 
induced countrywide lockdown.
Source: Google Images
Monetary policy
 As a result, the reverse repo rate stands at 
3.35 per cent, said RBI Governor Shaktikanta 
Das. The six-member monetary policy 
committee (MPC) voted 5:1 in favour of the 
decision. RBI also predicted that GDP will be in 
negative for FY2020.
Source: Google Images
Reduced policy repo rate
 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 40 bps to 4.0 per cent from 4.40 
per cent with immediate effect
Source: Google Images
Other cuts
 Accordingly, the marginal standing facility 
(MSF) rate and the Bank Rate stand reduced 
to 4.25 per cent from 4.65 per cent and the 
reverse repo rate under the LAF stands 
reduced to 3.35 per cent from 3.75 per cent.
Source: Google Images
Supporting the economy
 The MPC also decided to continue with the 
accommodative stance as long as it is necessary 
to revive growth and mitigate the impact of 
COVID-19 on the economy, while ensuring that 
inflation remains within the target.
Source: Google Images
Supporting growth
 These decisions are in consonance with the 
objective of achieving the medium-term target 
for consumer price index (CPI) inflation of 4 
per cent within a band of +/- 2 per cent, while 
supporting growth.
Source: Google Images
Domestic economy impact
 The MPC noted that the Domestic economic 
activity has been impacted severely by the 
lockdown. High frequency indicators point to a 
collapse in demand beginning March 2020 across 
both urban and rural segments, as both 
investment activity and private consumption 
suffered.
Source: Google Images
Moratorium extension
 Reserve Bank Governor Shaktikanta Das also 
extended the moratorium on payment of loans by 
another three months till August to provide 
much-needed relief to borrowers whose income 
has been hit due to the coronavirus crisis.
More rate cuts on the cards
 Despite the steep reduction in rates already, 
there may be more to come. The MPC maintained 
an accommodative stance and said that scope for 
further monetary policy easing may open up as 
inflation eases against the backdrop of an 
extremely weak economy.
Source: Google Images