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August 2019 Bimonthly Monetary Policy Statement

  May 27, 2020

August 2019 Bimonthly Monetary Policy Statement

What did the RBI decide in August?

The Reserve Bank of India (RBI) and the monetary policy committee (MPC) in early August in their bimonthly monetary policy statement, lowered its repo rate by an unconventional 35 basis points to 5.4%. 

What was the stance?

All members of the MPC unanimously voted to maintain the accommodative stance of monetary policy. 

What is accommodative stance?

An accommodative monetary policy is characterized by a series of decreases in the repo rate which makes money easier (cheaper) for business and consumers to borrow. 

Why did the MPC loosen the policy?

In order to boost consumption and growth as 

  1. Inflation is low
  2. Private consumption is falling
  3. Global trade tensions are pulling down exports and thus growth too
  4. Growth is sluggish