RBI had last cut the key interest in October 2016.

The Reserve Bank of India (RBI) today announced a 0.25 per cent cut in the repo rate in its third bi-monthly monetary policy review. With the key interest rate coming down to 6 per cent, loans are likely to get cheaper. The top bank has kept the reverse repo rate at 5.75 per cent.

The six-member monetary policy committee (MPC) of the RBI headed by RBI Governor Urjit Patel announced the rate cut for the first time in 10 months. The central bank last cut its key interest rate in October 2016.

"Inflation has fallen significantly in last three months due to implementation of GST and good monsoon," Urjit Patel said while announcing the rate cut.

"Growth forecast remains unchanged at 7.3 per cent for the current fiscal," the RBI Governor added.

HERE'S WHAT URJIT PATEL SAID:

Inflation including good and fuel has fallen significantly over the past three months.

The roll out of the GST has been smooth and the monsoon normal.

However, the trajectory of inflation in the baseline projection is expected to rise from current lows. The monetary policy committee (MPC) decided to keep the policy stance neutral and to watch incoming data.

MPC remains focused on its commitment to keeping headline inflation close to 4 per cent on a durable basis.

On the state of the economy, the MPC is of the view that there is an urgent need to reinvigorate private investment, remove infrastructure bottlenecks and provide a major thrust to the Pradhan Mantri Awas Yojana for housing needs of all.

The government and RBI are working in close coordination to resolve large stressed corporate borrowers and recapitalize public sector banks within the fiscal deficit target.

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WATCH VIDEO: Loans likely to become cheaper as RBI announces .25 per cent cut in repo rate