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Repo Rate Cut by 35 bps: Key Statements Made by RBI Governor Shaktikanta Das

RBI governor Shaktikanta Das, in his interaction with the media after the policy meeting, made quite a few interesting statements, giving an insight into the central bank’s priorities and challenges going ahead.

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Updated:August 7, 2019, 3:27 PM IST
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Repo Rate Cut by 35 bps: Key Statements Made by RBI Governor Shaktikanta Das
File photo of RBI Governor Shaktikanta Das.
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The Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC) cut the benchmark repo rate by 35 basis points to 5.4% in its August policy review on Wednesday, while maintaining an ‘accommodative’ stance. RBI governor Shaktikanta Das, in his interaction with the media after the policy meeting, made quite a few interesting statements, giving an insight into the central bank’s priorities and challenges going ahead. Take a look at some key excerpts from Shaktikanta Das’s conversation with journalists:

On interest rates

— Rate increase is off the table

— There is no proposal for a CRR (cash reserve ratio) cut at present

— Linking interest rate to an external benchmark is still under discussion

On the unconventional 35 basis points cut

— There was nothing sacred about multiples of 0.25 percentage point cuts

— The decision has not been taken on gut feel but on hard data

— Cutting repo rate by 25 bps was inadequate, while a 50 bps cut would have been excessive

— Too much should not be read into it, it is a judgement call which the MPC has taken

On growth and inflation

— The growth slowdown is not structural but cyclical

— This is not the time to look at real inflation, but to fill the output gap

— Confident of credit demand picking up and growth reviving

On banks and NBFCs

— We expect higher transmission of policy rates by banks in the coming weeks

— The system is ‘flushed’ with liquidity and hence the cycle of transmission by banks has begun

— RBI cannot tell banks who to lend to, but the banking regulator will ensure a good credit flow

— There is no cartelisation by banks in holding on to higher lending rates

— RBI’s endeavour is that none of the large non-banking lenders collapses

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| Edited by: Ahona Sengupta
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