The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) today reduced its key policy repo rate under the liquidity adjustment facility (LAF) by 35 basis points (bps) from 5.75% to 5.40%, saying that addressing growth concerns by boosting aggregate demand, especially private investment, assumed the highest priority at this juncture.
Consequently, the reverse repo rate under the LAF stood revised to 5.15% and the marginal standing facility (MSF) rate and the Bank Rate to 5.65%, the central bank's Third Bi-monthly Monetary Policy Statement, 2019-20, based on the resolution of the MPC at its meeting here today.
The MPC also decided to maintain the accommodative stance of monetary policy.
"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," the statement said.
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