Three days after the Budget cut the small savings interest rates by 50 basis points, the Reserve Bank of India has decided to conduct a one-day fixed rate repo at 6 per cent tomorrow.
By doing this, the RBI has signalled a 50 basis points cut in the rate of repo auctions which is part of its daily liquidity adjustment facility (LAF). A decision to cut the rate is likely to be announced tomorrow. The RBI conducts the fixed rate repo rarely to signal short term interest rate movements.
The RBI had last cut the repo rate on May 28 last year when it was pared by 25 basis points