RBI Repo Rate History in India

Last Updated 22nd Aug 2019

RBI Repo Rate

7th August 2019 – RBI cuts repo rate by 35 bps to 5.40%

  • Current Repo rate is priced at 5.40%
  • Change in RBI Repo Rate leads to change in MCLR rate
  • RBI Monetary policy keeps inflation under control and accelerates the economic growth
  • RBI rate cut increases the demand for loans due to lower interest rates
  • Banks use repo rate to determine deposit rate, lending rates or base rates
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Current Repo Rate and History

Last Update Rate
07th Aug 19 5.40%
06th Jun 19 5.75%
04th Apr 19 6.00%
07th Feb 19 6.25%
05th Dec 18 6.50%
05th Oct 18 6.50%
01st Aug 18 6.50%
06th Jun 18 6.25%
05th Apr 18 6.00%
07th Feb 18 6.00%
06th Dec 17 6.00%
04th Oct 17 6.00%
02nd Aug 17 6.00%
08th Jun 17 6.25%
06th Apr 17 6.25%
08th Feb 17 6.25%
07th Dec 16 6.25%
04th Oct 16 6.25%
05th Apr 16 6.50%
29th Sep 15 6.75%
02nd Jun 15 7.25%
04th Mar 15 7.50%
15th Jan 15 7.75%
28th Jan 14 8.00%
18th Dec 13 7.75%
29th Oct 13 7.75%
20th Sep 13 7.50%
03rd May 13 7.25%
19th Mar 13 7.50%
29th Jan 13 7.75%
17th Apr 12 8.00%
25th Oct 11 8.50%
16th Sep 11 8.25%
26th Jul 11 8.00%
16th Jun 11 7.50%
03rd May 11 7.25%
17th Mar 11 6.75%
25th Jan 11 6.50%
02nd Nov 10 6.25%
16th Sep 10 6.00%
27th Jul 10 5.75%
02nd Jul 10 5.50%
20th Apr 10 5.25%
19th Mar 10 5.00%
21st Apr 09 4.75%
05th Mar 09 5.00%
05th Jan 09 5.50%
08th Dec 08 6.50%
03rd Nov 08 7.50%
20th Oct 08 8.00%
30th Jul 08 9.00%
25th Jun 08 8.50%
12th Jun 08 8.00%
30th Mar 07 7.75%
31st Jan 07 7.50%
30th Oct 06 7.25%
25th Jul 06 7.00%
24th Jan 06 6.50%
26th Oct 05 6.25%

Repo Rate

RBI repo rate is the most important policy interest rate in India. The repo rate is decided by the RBI Monetary Policy Committee headed by the RBI Governor.

What is Repo Rate - This is the interest rate at which the RBI lends money to licensed commercial banks in case they need short term funds to meet regulatory or business requirements.

Repo Rate as monetary policy signaling tool - More than anything else, the repo rate is used by the central bank to signal its monetary policy stance to the banks, businesses, government and people at large. RBI reviews the repo rate from time to time as part of the monetary policy review. Generally monetary policy fulfills two objectives – Keeping inflation under control and accelerating the economic growth.

7th August 2019 – RBI cuts repo rate by 35 bps to 5.40%

Repo Rate has been cut by 35 bps by RBI from 5.75% to 5.40% in its 3rd bi-monthly monetary policy on 7th August 2019. Repo Rate has been cut 4th time in a row and is at the lowest in the last 9 years. This rate cut should bring in good news for home loan and mortgage loan borrowers, as the banks are expected to reduce their MCLRs, which should result in lower interest rates both for new and existing borrowers.

RBI Repo Rate Cut

The likely scenarios when repo rate is reduced:

  • When the central bank wants to signal lower interest rates in the market
  • When RBI is reasonably confident that inflation and fiscal deficit are in control and a demand led price surge is unlikely
  • When the economy is slowing down and the RBI wants to accelerate growth by signaling an accommodative monetary policy
  • When the external balance of payments situation of the country is seen to be stable by the bank

Impact of Repo Rate Hike

  • As the new MCLR is linked to Repo Rate, any increase in repo rate will lead to increase in MCLR. This will lead to increase in interest rate for borrowers who have taken floating rate home loan, personal loan and business loan
  • As the Repo Rate is increased, the demand for credit facilities (loan) will decrease, due to higher interest rate. This will help RBI and government to control inflation
  • Corporate will be able to get cheaper funds for business expansion. This will help in achieving the growth target

RBI Repo Rate increase

The likely scenarios when the RBI is likely to raise repo rate are:

  • When the central bank wants to signal higher interest rates in the market
  • When RBI sees over heating in the economy and perceives a risk that inflation may surge
  • When there may be a risk of asset bubbles being created due to excessive capital formation
  • When the RBI wants to reduce speculation in foreign exchange or sees a risk of disorderly depreciation of Indian currency

How does repo rate cut translate into lower interest rates

When the RBI cuts repo rate, cost of funds of banks reduces. As a result, the banks are able to advance loans to their customers at a lower cost. Banks typically use the repo rate as a signal to determine their deposit rates, lending rates and base rates.

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