In its mid-Quarter Monetary Policy Review of March 2013, the Reserve Bank of India (RBI) today has decided to reduce the repo rate by 25 basis points from 7.75 per cent to 7.5 per cent with immediate effect.
Consequently, the reverse repo rate stands adjusted to 6.5 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 8.5 per cent with immediate effect.
The apex bank in its press release said that since the Reserve Bank’s Third Quarter Review (TQR) of January 2013, global financial market conditions have improved, but global economic activity has weakened.
It further said that, on the domestic front too, growth has slowed down significantly, even as inflation remains at a level which is not conducive for sustained economic growth. The apex bank also said that although there has been notable softening of non-food manufactured products inflation; food inflation remains high, driving a wedge between wholesale price and consumer price inflation.