Finance ministry unhappy, expected 50 BPS rate cut

RBI Governor Urjit Patel addressing a press conference immediately after the rate cut was announced said growth forecast remains unchanged at 7.3 per cent for the current fiscal. Inflation has fallen significantly in last three months due to implementation of GST and good monsoon. The RBI governor also credited the implementation of the GST with allowing policy change.

NDTV reports that the finance ministry is unhappy with the rate cut, saying it expected a much larger rate cut of 50 basis points.

The RBI today cut the repo rate or its key lending rate by 25 basis points to 6 per cent, a seven-year low. Forty of 56 economists polled by Reuters, reports NDTV, had expected the RBI to cut its repo rate by a quarter percentage point to 6 per cent on Wednesday. The interest at which banks borrow funds from RBI by selling their securities and bonds is called Repo Rate. Banks are expected to lower their lending rates, making loans cheaper.