India's Central Bank cuts rates by 25 bps as expected
2013-03-19 14:27:10
India's central bank reduced its key interest rates by a quarter point for the second time this year, as widely expected by economists.
The Reserve Bank of India on Tuesday lowered its repo rate to 7.50 percent from 7.75 percent and adjusted the reverse repo rate to 6.50 percent from 6.75 percent.
The repo rate is the rate at which the central bank lends to banks and the reverse repo rate is the rate at which it accepts deposits from banks.
At the same time, the RBI retained its cash reserve ratio at 4.00 percent. The central bank last slashed the key rates and CRR by 25 basis points in January.
The bank observed that the foremost challenge for returning the economy to a high growth trajectory is to revive investment. Inflation remains at a level which is not conducive for sustained economic growth, the bank said.
It said even as the policy stance emphasises addressing the growth risks, the headroom for further monetary easing remains quite limited.