RBI reduced Repo rate by 25 basis points to 7.5 percent [ Current Affairs ]

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The Reserve Bank of India (RBI) reduced the repo rate by 25 basis points to 7.5 percent with immediate effect on 4 March 2015 and RBI reduces 2nd time since January 2015 that earlier RBI reduced the repo rate by 25 basis points. At present scenario-

  1. Reverse repo rate under the LAF stands adjusted- 6.5 %
  2. Repo rate-7.50 %
  3. Marginal standing facility (MSF) rate – 8.5 %
  4. CRR(cash reserve ratio) – 4 % (unchanged)
  5. Bank rate- 8.5 %

The RBI reduced the repo rate by monetary policy for the following developments-

  1. Repo rate- it is the rate of interest RBI gives short term loan (up to 90 days) to commercial bank.
  2. Reverse repo rate- when commercial banks deposit its excess money in RBI the rate of return is called RRR.
  3. Marginal standing facility- RBIgivesovernight loan to commercial bank.

According to the new Consumer Price Index (CPI) rebased (2012) and it was released on 12 February 2015. As per rule, inflation in January 2015 stood at 5.1 percent which was well within the target of 8 % for January 2015. Reserve Bank of India has announced a monetary policy action ahead of markets opening in first time.

- Published on: March 7, 2015