RBI cut key interest rate to 6.75% by 50 basis pointsJust In

September 29, 2015 15:10
RBI cut key interest rate to 6.75% by 50 basis points

On Tuesday, Reserve Bank of India has cut its key interest rate to 6.75% by 50 basis points. This is the lowest since May 2011. It also cut repo rate to 6.75% by 50 basis points.

The current and the 23rd Governor of the Reserve Bank of India, Raghuram Rajan, made an announcement on the downward revision in the growth projection of RBI for the year to 7.4% compared to 7.6% earlier. The downward revision announced in the fourth bi-monthly Monetary Policy Statement for 2015-16 is the second in 2015.

 

According to the Governor, that underlying economic activity remains weak due to rainfall deficiency, sustained decline in exports and weaker momentum than expected in industrial production besides investments. He also said that in recent quarters, there is a fall in business sentiment as per surveys.

“In India, a tentative economic recovery is underway, but it is still far from robust,” Rajan added.

Dr. Rajan said that the inflation target set in the Monetary Policy Agreement will be achievable. The inflation target of 6% was set in the Monetary Policy Agreement for January 2016, between the Modi Government and the RBI. In January, Inflation would be a shade lower at 5.8%, said Dr. Rajan.

-Sumana

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