The announcement came just a day after the government unveiled a Rs 1.70 lakh crore relief package to shield poor people from the Covid-19 pandemic. 

RBI Governor Shaktikanta Das. (Photo: Reuters)

RBI governor Shaktikanta Das on Friday announced that its Monetary Policy Committee (MPC) decided to advanced its meeting in view of the Covid-19 crisis and voted for a massive reduction in repo rate in order to mitigate economic risks.

It may be noted that the MPC meeting, which was earlier scheduled for March 31-April 3, was advanced to March 25-27 in view of the deteriorating economic situation.

The RBI’s MPC has voted in favour of an interest rate cut to the tune of 75 basis points, which brings the repo rate down to 4.4 per cent from 5.15 per cent. The reverse repo rate has also been reduced by 90 basis points to 4 per cent in a bid to maintain financial stability and revive growth.

RBI Governor said that the outlook remains extremely uncertain at the time and going forward much will depend on how India battles Covid-19 pandemic. “The outlook is now heavily contingent upon the intensity, spread and duration of the pandemic. There is a rising probability that large parts of the world will slip into recession,” Das added.

“MPC noted that global economic activity has come to a near stand-still as Covid-19 related lockdowns and social distancing in affected countries. Expectations of a shallow recovery in 2020 from 2019’s decade low in global growth have been dashed,” Shaktikanta Das said.

Apart from reducing key rates, the RBI also announced a slew of liquidity measures related to TLTRO, CRR and MLCR to ease mounting pressure.

The announcement came just a day after the government unveiled a Rs 1.70 lakh crore relief package to shield poor people from the virus outbreak.

RBI’s fresh announcements will further provide relief to several Indians who have been forced to sit home in the wake of the novel coronavirus outbreak.

Earlier, the central bank governor said it has enough reserves to tackle the crisis and that it would step in whenever the situation worsens.

RBI has also been conducting many other monetary operations for better liquidity management as it scrambles to keep the banking sector healthy in a bid to support the economy in the wake of the novel coronavirus pandemic.

Also Read | Coronavirus outbreak: India leans on social distancing, community kitchens as positive cases near 700

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