The third successive rate cut of 0.25 percent is a 'decisive and timely' move to address the rising growth concerns, and a rate hike is off the table for now with the shift to an "accommodative" stance, Reserve Bank governor Shaktikanta Das said on Thursday.
The governor also said liquidity--where a deficit had been bothering the financial system for nearly a year -- is in surplus now, and he vowed to ensure there is enough liquidity for every productive purpose.
Assuming more headwinds to growth, the Reserve Bank also narrowed down its GDP forecast for the current fiscal to 7 percent from 7.2 percent. It can be noted that that FY19 ended with a lower than estimated 6.8 percent, as the fourth quarter GDP printed a five-year low of 5.8 percent.
"The unanimous vote reflects the resolve of the monetary policy committee to act decisively and act in time (to address the growth concerns)," Das told reporters after the announcement of the policy review.
As expected the MPC announced a 25 bps rate cut in short term lending rate to 5.75 percent, which is the lowest repo rate in nine years.
To a specific question on the change in stance from 'neutral' to 'accommodative', Das said it means that there will not be any rate hike from here.
"The accommodative stance would basically mean that a rate increase is off the table," Das said, but was quick to clarify that it does not necessarily mean more rate cuts are in the offing.
(with news agency inputs)