RBI cuts Repo Rate, BSE Sensex surges by 600 Points

The Reserve Bank of India (RBI) has brought huge cheer to the market and investors by cutting the repo rate by 25 basis points, but kept the CRR (Cash Reserve Ratio) unchanged at 4%. The repo rate now stands at 7.75%.

Raghuram Rajan, RBI Governor, said, “Since July 2014, inflationary pressures (measured by changes in the consumer price index) have been easing. The path of inflation, while below the expected trajectory, has been consistent with the assessment of the balance of risks in the Reserve Bank’s bi-monthly monetary policy statements.”

The BSE Sensex surged by over 600 points following the RBI’s decision. The Nifty too hit an all-time high. Repo rate is the rate at which the RBI lends money to commercial banks. With this rate cut, many banks may reduce the EMI, passing the benefits to the customers.