Why is it in the news ?
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Reserve Bank of India (RBI) announced another repo rate cut.
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For the fifth consecutive time this calendar year, the central bank cut the repo rate by 25 bps and the reverse repo by 25 bps.
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100 bps = 1 per cent.
More in the news
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The rate cut may have some effect as banks are supposed to link all new floating rate loans to any of the four external benchmarks.
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External benchmark linked loans are supposed to make transmission of RBI’s rate cuts down to the borrower faster.
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After the announcement, the repo rate stands at 5.15 per cent and reverse repo rate at 4.90 per cent.
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The rate cut is expected to reduce EMIs (equated monthly instalments) of borrowers and also make it cheaper to take new loans.
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RBI decided to continue with the accommodative stance.
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Market observers said while the rate cut is a positive move, the market felt disappointed as it was short of expectations.
Source
The Hindu.