RBI Governor Urjit Patel had opted for a moderate rate cut of 25 basis points arguing that low food prices were unusual and vulnerable to upward pressures, said minutes of the last Monetary Policy Committee (MPC) meet released today. Patel had also opined that effective transmission of policy rate was key to non-inflationary growth and banks have still space to cut lending rates.The RBI Governor-headed six-member MPC had met on August 1 and 2 to decide this fiscal’s third bi-monthly monetary policy.Based on the majority view at the MPC meet, the central bank reduced the key policy rate (repo) by 25 basis points to 6 per cent, although the industry and other stakeholders were expecting more than that.

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