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The Reserve Bank of India today cut the repo rate by 25 basis points to 7.75% with immediate effect. One basis point is one-hundredth of a percentage point.
The CRR remains unchanged at 4%.
The move comes after WPI inflation for December came in at 0.11%, marginally higher than the flat inflation logged in Novemeber.
During the month, the rate of retail inflation also increased a little — to 5% from an all-time low of almost 4.4% in November.
However, the number is still well below the Reserve Bank's target of 8% by January.
"Inflation outcomes have fallen significantly below the 8% targeted by January 2015. On current policy settings, inflation is likely to be below 6% by January 2016.These developments have provided headroom for a shift in the monetary policy stance," RBI governor Raghuram Rajan said in a statement.
"Key to further easing are data that confirm continuing disinflationary pressures," he added.
In the face of widespread calls for rate cuts from industry -- and occasional hints from the Finance Ministry -- Rajan has insisted that the central bank would move on interest rates only on the basis on data that points to lower, more stable rates of inflation. (PTI - Business Standard)
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