One reason for this tardiness in policy rate transmission is the expectation of another round of rate cut either in April or June. Besides the repo rate, the RBI on Thursday reduced the reverse repo rate to 6 per cent from 6.25 per cent. The repo rate is the rate at which commercial banks borrow money from the RBI; while the reverse repo rate is the rate at which RBI collects money from banks. Finance minister Piyush Goyal said the RBI rate cut will give a boost to the economy by providing affordable credit to small businesses and homebuyers. Welcome change of stance to neutral and rate cut by 25 bps.

Source: The Telegraph February 07, 2019 19:41 UTC