RBI’s surprise move: Repo rate cut by 0.25%

Mangalore Today News Network

New Delhi, Jan 15, 2015: The Reserve Bank of India (RBI) on Thursday cut the repo rate by 25 basis point from 8 percent to 7.75 percent with immediate effect.

The cash reserve ratio (CRR) remains unchanged at 4 percent.

The reverse repo rate too remains unchanged. The RBI is next scheduled to meet on February 3.

The RBI has been under pressure from government and business leaders to reduce rates to increase lending and help kickstart the economy.

But RBI governor Raghuram Rajan has insisted his priority is bringing inflation under control, although expectations had been high for a cut at the February 3 meeting.

The RBI’s move comes after the Wholesale Price Index (WPI) based inflation moved up marginally in December to 0.11 percent from zero level in November, reversing the six month declining trend.

The slight increase in inflation rate was due to spurt in ’food items’ basket. Food inflation in December moved to 5-month high of 5.2 percent, as per the government data.

While inflation in pulses, vegetables and fruits was higher in December over the previous month, it eased in wheat, milk and other protein rich items like egg, meat and fish.

 

Courtesy: Deccan herald