By Central Bank News
The Reserve Bank of India [RBI] cut its repo rate by 50 basis points to 8.00% from 8.50% previously, and reverse repo rate to 7.00%, Bank Rate to 9.00% and kept the Cash Reserve Ratio (CRR) at 4.75%. The RBI said: “Though inflation has moderated in recent months, it remains sticky and above the tolerance level, even as growth has slowed. These trends are occurring in a situation in which concerns over the fiscal deficit, the current account deficit and deteriorating asset quality loom large. The challenge for monetary policy will thus be to maintain its vigil on controlling inflation while being sensitive to risks to growth and other vulnerabilities.”
The Reserve Bank of India previously cut the CRR by 75 basis points to 4.75%, and last increased the repo rate by 25 basis points at its October and September meetings, after hiking a surprise 50 basis points at its previous meeting to 8.00%, having increased 25 basis points in June, and 50 basis points during the May meeting. India’s key inflation measure, the wholesale price index, increased just 6.89% in March, down from 7.57% in December, 9.11% in November, 9.36% in October, 9.72% in September, 9.78% in August, 9.22% in July, 9.44% in June, 9.06% in May, 8.66% in April, and 8.98% year on year in March last year. India reported annual GDP growth of 6.1% in December, 6.9% in the September quarter, down from 7.7% in the June quarter, and 7.8% in the March quarter last year, and 8.3% in the previous quarter. The RBI previously revised its growth projections down for 2011-12 to 7.6 percent from 8.0 percent previously, due to downside risks. The Indian Rupee (INR) last traded around 51.50 against the US dollar.
