information about the central bank’s bi-monthly monetary policy at 12 noon today. RBI has given this information in one of its tweets. It is expected that in today’s monetary policy, the Reserve Bank can cut the repo rate by 0.25 percent. If the repo rate is cut by one-fourth percent, then it will come down to 3.50 percent despite inflationary pressures. In addition, the duration of the moratorium can also be increased.
Let me tell you that in recent monetary policy reviews, the Reserve Bank has focused more on financial stability. At the same time, work has been done to further the growth. Since February 2020, the RBI has cut the repo rate by 1.15 percent.
Watch out for Bi-monthly Monetary Policy address by RBI Governor @DasShaktikanta at 12:00 hrs on August 06, 2020 #rbitoday #rbigovernor
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Apart from a cut in the repo rate, it is also expected that the Reserve Bank of India may announce liquidity and regulatory measures in its monetary policy review as part of measures to boost growth.
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In view of the effects of the corona virus on the economy, the Reserve Bank in March extended the loan moratorium (deferment for loan installments) for three months to borrowers. The facility was initially offered for three months from March to 31 May. Later the Reserve Bank extended it for another 3 months till 31 August. It is expected that in view of the situation, its deferment can be increased today.
What is Repurchase Rate or Repo Rate?
Consider Repo Rate in such a way that banks give us a loan and we have to pay interest on that loan. Similarly, banks also require huge amount of money for this loan and they borrow from Reserve Bank of India (RBI). The rate at which RBI charges interest on this loan taken by banks is called repo rate.
Impact of repo rate on common man
When RBI will provide loans at low interest rate to the banks, meaning when the repo rate is low, banks can also give cheaper loans to their customers. Similarly, if the RBI increases the repo rate, it becomes expensive for banks to take loans and banks make loans expensive for their customers.
