(Corrects second paragraph to say RBI said all six members
voted in favour of the rate cut)
MUMBAI Oct 4 India's newly minted monetary
policy committee delivered a surprise 25-basis-point cut in the
repo rate to 6.25 percent on Tuesday, as Reserve Bank of India
Governor Urjit Patel presided over his first policy review since
his appointment last month.
The latest cut extends an easing cycle that began in January
2015 and reduces the repo policy rate to its lowest
since November 2010. The RBI said all six members voted in
favour of the rate cut.
Analysts had braced for a close vote. About 60 percent of
analysts polled by Reuters had expected the central bank to keep
the repo rate unchanged, while 40 percent had forecast a cut.
The MPC, which was meeting for the first time, was
introduced to make decision-making more transparent and more
collegiate. Hitherto, the RBI governor had taken sole
responsibility for deciding rates. Governor Patel, who was
appointed last month, has a deciding vote if the panel is evenly
"The decision of the MPC is consistent with an accommodative
stance of monetary policy in consonance with the objective of
achieving consumer price index inflation at 5 percent by Q4 of
2016-17," the RBI said in its statement.
The broader NSE index was up 0.3 percent, while the
benchmark 10-year bond fell 3 basis points to
6.75 percent. The rupee extended gains to 66.40 per
dollar from 66.47.
Consumer inflation eased to a five-month low of
5.05 percent in August, within the committee's 2-6 percent
objective, and is expected to ease further in the months ahead
after a good monsoon has sent food prices sharply lower.
In the March-June quarter economic expansion slowed to 7.1
percent annually from 7.9 percent in the previous quarter,
though that still places India among the world's fastest-growing
While the MPC has been given a mandate of "maintaining price
stability," it must do so "while keeping in mind the objective
of growth," according to the amended RBI Act.
(Reporting by Suvashree Dey Choudhury and Rafael Nam; Editing
by Simon Cameron-Moore)