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India Central Bank cuts interest rate to 5-year low
April 5, 2016, 6:35 am

The RBI governor Rajan said monetary policy would remain "accommodative" [Xinhua]

The RBI governor Rajan said monetary policy would remain “accommodative” [Xinhua]

The Central Bank of India on Tuesday cut the key policy repo rate by 25 basis points to 6.50 per cent while announcing measures to ensure more availability of cash in the banking system. That’s the lowest since March 2011.

“The Reserve Bank will continue to watch macroeconomic and financial developments in the months ahead with a view to responding with further policy action as space opens up,” a statement from the Central Bank said.

The RBI retained gross-value added growth projection for year through March 2017 at 7.6 per cent.

The Indian Central Bank also raised the reverse repo – or the rates lenders charge to the central bank – by 25 basis points to 6.0 per cent.

“The stance of monetary policy will remain accommodative,” Governor Raghuram Rajan said in the statement.

The RBI on Tuesday also reduced the cash proportion of the daily reserve requirements that banks must keep with the RBI, while pledging to inject more long-term liquidity.

The RBI statement in Mumbai also said it expected inflation to decelerate modestly and remain around 5 per cent through March 2017.

The RBI had cut its repo rate by 125 basis points last year.

 

Source: Agencies