Amid concern over the economic slowdown, the Reserve Bank of India (RBI) on Wednesday cut repo rate as a damage control measure.
Repo rate is the interest rate at which the RBI lends money to banks.
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With the fourth in a row, the RBI’s monetary policy committee (MPC), headed by governor Shaktikanta Das, reduced repo rate by 35% basis points to 5.4%.
According to reports, with the fourth cut this year, the repo rate stands lowest level in the past nine years.
The RBI also trimmed the GDP growth rate for 2019-20 to 6.9%, as compared to earlier estimate of 7%.
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All members of the MPC unanimously voted to reduce the policy repo rate and to maintain the accommodative stance of monetary policy.
RBI governor Shaktikanta Das said the apex bank would take all the necessary steps to ensure adequate liquidity in the system.
The last time the RBI made so many back-to-back cuts was after the global financial crisis over a decade ago, when most major central banks were desperate to revive economic growth.
A slew of high-frequency indicators – including sliding car sales – suggest the economy is yet to recover from a dismal performance in the first three months of this year, when GDP growth slumped to a five-year low of 5.8%.
Running at 3.18% in June, India’s retail inflation has remained below the central bank’s medium-term target of 4% for almost a year.