RBI cuts repo-rate and CRR by 25bps

The Reserve Bank of India has cut the interest rate by 25 bps on Tuesday, as speculated. The Cash Reserve Ratio was also cut to 4 per cent from 4.5 per cent, by cutting down 25 bps.

The RBI has also cut the repo-rate by 25 basis points to 7.75 per cent from 8 per cent, for the first time since April 2012. The ease in the monetary policy will boost the Indian economy.

The cut in CRR will help to infuse around 1.80 billion rupees into the economy.

Speaking to media, the governor of RBI, Duvvuri Subbarao told that the soften in the headline inflation was the major factor leading for a cut in the interest rates by 25 basis points.

The headline inflation was at 8.1 per cent in the September 2012 and dropped to 7.2 per cent in December 2012.

The GDP was recorded 5.5 per cent in the first quarter and dropped to 5.3 in the second quarter.

The stock markets - BSE Sensex and NSE Nifty gained following the rate cut declared by the RBI.