India being high in the rate of inflation, recently, smoothens it which is a result of decrement in Inflation rates. The key policy rate has deducted to 25 base points (bps). This equates to 6% in its third momentary policy review on Wednesday.
Reason for Cut in Inflation
Monetary Policy Committee has cut its rates second time after the inception in the last year of October.
“The decision of MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of ±2% while supporting growth,” the RBI stated.
The reverse repo made to 5.75% cutting the rates of banking and Marginal Standing Facility to 6.25%. The MPC members gave support to this policy decision. The members include ChetanGhate, Pami Dua, Viral V.Acharya, and UrijitR.Patel. Ravindra H.Dholakia was in favor of reducing 50 bps while Michael Patra for status quo.