The first rate cut of the new fiscal comes soon after data indicated that eight core industries grew only marginally in February
In a statement, the RBI said, “On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) at its meeting today decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 6.0 percent from 6.25 percent with immediate effect.”
The core sector includes coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity.
Explaining its policy decision, the RBI statement further adds: The second advance estimates for 2018-19 released by the Central Statistics Office (CSO) in February 2019 revised India’s real gross domestic product (GDP) growth downwards to 7.0 per cent from 7.2 per cent in the first advance estimates. Domestic economic activity decelerated for the third consecutive quarter in Q3:2018-19 due to a slowdown in consumption, both public and private.”