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2nd LD Wrirtethru: India cuts key lending rates

Xinhua, March 4, 2015 Adjust font size:

In a surprise move, India's central bank Wednesday cut its key lending rates by 25 basis points, reflecting growing confidence of the government to control inflation.

The repurchase (repo) rate stands reduced to 7.5 percent from 7. 75 percent, while the reverse repo rate has been adjusted to 6.5 percent from 6.75 percent.

"To summarise, softer readings on inflation are expected to come in through the first half of 2015-16 before firming up to below 6 percent in the second half," Reserve Bank Governor Raghuram Rajam said in a statement.

"The fiscal consolidation program, while delayed, may compensate in quality, especially if state governments are cooperative," said the governor.

"Given low capacity utilization and still-weak indicators of production and credit off-take, it is appropriate for the Reserve Bank to be pre-emptive in its policy action to utilise available space for monetary accommodation," he added.

The India's central bank had lowered interest rates by 25 basis points on Jan. 15.

Indian government, while presenting its new budget last weekend, said it is controlling inflation while delaying fiscal consolidation target. Endi