Opinion | 110 bps cut later, transmission is the key now
RBI has infused liquidity in the banking system, which is currently in surplus
Come any monetary policy review by the Reserve Bank of India (RBI), and all eyes are on the “action" on policy rate, like the climax of a movie. This is because the repo rate is the pivot that moves interest rates across the economy. RBI’s monetary policy committee (MPC) reduced the repo rate from 5.75% to 5.4%. It is the rate at which banks avail of liquidity from RBI, when required. The repo rate is the starting point of the needle of interest rates in the economy. When RBI wants interest rates to come down, MPC reduces the repo rate.