RBI eases repo rate,it stands at 7.75 percentBusiness News

January 15, 2015 09:42
RBI eases repo rate,it stands at 7.75 percent

(Image source from: RBI eases repo rate)

In a surprise move the Reserve Bank of India (RBI) on Thursday cut the repo rate by 25 basis points from 8 percent to 7.75 percent with immediate effect. The cash reserve ratio (CRR) remains unchanged at 4 percent. The reverse repo rate too remains unchanged. 

The RBI's move comes after the Wholesale Price Index (WPI) based inflation moved up slightly in December to 0.11 percent, while it was at zero level in November, first time the WPI increased in the six months period.

The ease came from the lower inflation than that of expected change, weak crude prices and weak demand, as well as the government's commitment to sticking to a fiscal deficit target.

Food items have shown marginally higher inflation while wheat, milk and other protein food items like egg, meat and fish maintained the consistency of normal inflation level.

Cut in the repo rate makes banks and borrowers happy as the money shall be capitalized for the banks and consumers. Generally change in repo rate coupled with reverse repo rate, but other than repo rate everything got unchanged.

AW: Kannamsai

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