Reserve Bank of India (RBI)’s 3rd bi-monthly monetary policy statement for year 2016-17

According to the Reserve Bank of India (RBI)’s 3rd bi-monthly monetary policy statement for year 2016-17, the policy repo rate under the Liquidity Adjustment Facility (LAF) has reduced by 25 basis points from 6.25% to 6.0% with immediate effect. This move is expected to lower EMIs for home, auto and personal loans. This is the first rate cut since October 2016 and the interest rate is now at 6-year low. In line with record low retail inflation, the reverse repo rate under the LAF stands adjusted to 5.75%, and the Marginal Standing Facility (MSF) rate and the Bank Rate to 6.25%. The RBI Governor headed, six member Monetary Policy Committee also decided to keep the policy stance neutral in consonance with the objective of achieving the medium-term target for consumer price index inflation of 4%.