NEW DELHI: Reserve Bank of India on Wednesday cut repo rate by 25 bps to 7.5 per cent from 7.75 per cent earlier. Consequently, the reverse repo rate under the LAF stands adjusted to 6.5 per cent.
Going forward, the RBI will seek to bring the inflation rate to the mid-point of the band of 4 +/- 2 per cent provided for in the agreement, i.e., to 4 per cent by the end of a two year period starting fiscal year 2016-17.
RBI kept the CRR of of scheduled banks unchanged at 4.0 per cent of net demand and time liabilities (NDTL); It will continue to provide liquidity under overnight repos at 0.25 per cent of bank-wise NDTL at the LAF repo rate and liquidity under 7-day and 14-day term repos of up to 0.75 per cent of NDTL of the banking system through auctions.
The softer readings on inflation are expected to come in through the first half of 2015-16 before firming up to below 6 per cent in the second half, the central bank said in a statement.