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India cuts short-term lending rate by 25 basis points to 6.25 pct

Xinhua, October 4, 2016 Adjust font size:

The Reserve Bank of India (RBI) Tuesday cut its short-term lending rate, or repo rate by 25 basis points to 6.25 percent, as the first exercise of Monetary Policy Committee (MPC) chaired by Governor Urjit Patel after he took office in early September.

All six members of MPC voted for the cut and the decision is consistent with accommodative stance of policy, said RBI.

The market was boosted by the cut immediately. The benchmark S&P BSE Sensex rose over 100 points after its announcement.

The rate cut was widely expected since the nation's retail inflation had sharply declined in August: CPI inflation dropped to 5.05 percent from 6.07 of July, while the annual CPI inflation object was set to 5 percent by Q4 of 2016-17 fiscal year to support growth.

RBI also said the government had announced measures to control the food price-hiking especially for pulses. The measures should help cool down the momentum of food inflation in the following months, said RBI. Endit