The Reserve Bank of India has reduced interest rates in an attempt to tackle the economic fallout of the three-week nationwide lockdown announced by India. Following a meeting of its monetary policy committee (MPC), the central bank has lowered the policy repo rate under the liquidity adjustment facility (LAF) by 75 basis points to 4.40 per cent from 5.15 per cent with immediate effect. The MPC also decided to continue with the accommodative stance as long as it is necessary to revive growth and mitigate the impact of coronavirus (COVID-19) on the economy, while ensuring that inflation remains within the target.
Announcing the decision, RBI Governor Shaktikanta Das said that a war effort was being mounted to combat the virus, involving both conventional and unconventional measures in a continuously battle-ready mode. Welcoming the RBI decisions, Prime Minister Narendra Modi twitted: "Today RBI has taken giant steps to safeguard our economy from the impact of the Coronavirus. The announcements will improve liquidity, reduce cost of funds, help middle class and businesses."
