MUMBAI, SEPT 29, 2015: With inflation running at record lows and the economy in danger of slowing down, the Reserve Bank of India on Tuesday surprisingly cut its key repo rate by 50 basis points to 6.75 percent, lowest in four-and-half-years. With the cut in repo rate home, auto and corporate loans are likely to cost less.
RBI Governor Raghuram Rajan justified the bigger than expected reduction saying consumer inflation was likely to be at 5.8 per cent, below the 6 per cent target for January.
The focus should now shift to bringing inflation to around 5 per cent by March 2017, Rajan said, adding that RBI will be vigilant for signs of monetary policy adjustments that are needed to stick to the “deflationary path”.
RBI lowered its economic growth forecast for the current fiscal to 7.4 per cent from its previous projection of 7.6 per cent.
Within minutes of RBI policy announcement, Andhra Bank cut its benchmark lending rates by 0.25 per cent. The other banks are likely to follow suit.
