The Reserve Bank of India (RBI) cut interest rates for a third time this year on Tuesday, taking advantage of subdued inflation to give more support to an economy that many economists doubt is doing as well as latest impressive growth numbers suggest.
- The RBI’s quarter point reduction in the repo rate to 7.25 percent was predicted .
- Previous cuts, in January and March, had also been by 25 basis points.
- The RBI reduction came just weeks after China made its third interest rate reduction in six months, but growth in India’s giant neighbour has been slowing down.
- The latest rate reduction showed the central bank’s confidence that that economy was in good shape to withstand any market turbulence when the Federal Reserve finally decides to raise interest rates, as it is expected to do later this year.
- Under a new monetary policy framework adopted this year, controlling inflation is RBI’s sole mandate. Weak global oil prices are helping the central bank to achieve its goals.
- Consumer price inflation hit a four-month low of 4.87 percent in April, well within the RBI’s target range of 2 to 6 percent, but the central bank on Tuesday projected a rise to 6.0 percent in January 2016.
Other Repo Rate , Reverse Repo rate , CRR And Bank Rate Status
- The Reserve Bank of India has cut repo rate by 25 basis points to 7.25 per cent
- Cash Reserve Ratio unchanged at 4 per cent.
- The central bank keep Statutory Liquidity Ratio (SLR) unchanged at 21.5 per cent.
- Ther Reverse repo rate has been adjusted to 6.25 pc from 6.5 per cent.
- The Bank Rate has come down to 8.25 per cent from 8.5 per cent.
Inflation is expected to rise to 6 per cent by January 2016, RBI said. Weak global oil prices are helping the central bank to achieve its goals.
Consumer price inflation hit a four-month low of 4.87 per cent in April, well within the RBI’s target range of 2 to 6 per cent, but the central bank on Tuesday projected a rise to 6.0 per cent in January 2016.