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RBI Surprises with Cut to 7.75%

Reserve Bank of India Governor Raghuram Rajan unexpectedly cut interest rates to help revive growth in Asia’s third-largest economy.  In an unscheduled review, Rajan lowered the benchmark repurchase rate to 7.75 percent from 8 percent, the first reduction since May 2013, he said in a statement today.

“Key to further easing are data that confirm continuing disinflationary pressures,” he said in the statement. “Also critical would be sustained high quality fiscal consolidation as well as steps to overcome supply constraints and assure availability of key inputs such as power, land, minerals and infrastructure.”

Rajan has focused on quelling inflation since taking office in September 2013, and today’s move signals confidence that price pressures will remain under control.

Bloomberg [1]

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