‘RBI cuts interest rates’, move to boost consumer sentiment going into polls
Reserve Bank of India (RBI) cut interest rates, delivering a shot in arm to Prime Minister, Narendra Modi’s poll hopes a week before start of marathon general election.
Second snip in borrowing costs this year comes as central banks around world take a softer line on monetary policy in face of a slowdown in global economy.
RBI said that benchmark repo rate-level at which it lends to commercial banks would be reduced by 25 basis points to 6 percent.
It was second consecutive reduction under RBI Governor, Shaktikanta Das, a Modi ally who was appointed in December after his predecessor quit following a spat with government over alleged interference.
Bank said time was ripe for a cut, with inflation well below its target of 4 percent. Move is expected to boost consumer sentiment going into polls.
“Output gap remains negative and domestic economy is facing headwinds, especially on global front,” Bank said in a statement.
“Need is to strengthen domestic growth impulses by spurring private investment, which has remained sluggish,” it added.