RBI cuts repo rate to 7.25%

Reserve Bank Governor Raghuram Rajan today in a press conference mentioned that the RBI had cut the repo lending rate by 25 basis points to 7.25 per cent. This move was widely anticipated given RBI’s comfort with consumer price inflation and the marked slowdown in industrial growth.

During his interaction with the media Rajan said, “Today’s rate cut is an attempt to ease the way for further investment to reduce medium-term supply constraints. Infact, we’ve aired a little bit on focusing on encouraging investment given the need to alleviate medium term supply constraints.”

“Going forward if more room builds up, we will have more room to take action,” the RBI Governor added.

Though the GDP growth is a pickup sign with a 7.5 per cent growth in the Gross Domestic Product in the January to March quarter, outstripping China’s GDP growth of 7 per cent in the same quarter, the complete economic revival of the Indian economy was yet to take place.

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