Explained: Reasons, implications of repo rate cut

The minutes of the Monetary Policy Committee reveal how its six members read the state of the economy. But is a repo rate cut enough, and how will linking repo rate to lending and deposits rates impact people?

The Reserve Bank of India (Express Photo)

On August 7, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) announced a cut of 35 basis points in the repo rate, which is the rate at which the RBI lends to the banking system. On August 21 (that is, 14 days since the decision), as is the norm, the RBI released the minutes of the MPC’s deliberations. The importance of the minutes lie in the details they provide about how different MPC members view the state of the Indian economy, and what they believe is the key area of concern.