RBI cuts repo rate by 25 bps, says room for further easing limited
The Reserve Bank of India (RBI) on Tuesday cut its key lending rate by 25 basis points (bps) in an attempt to prop up growth in the slowing economy, drawing comfort from inflation based on the wholesale price index staying under 7%, but warned that room for further monetary easing was limited.
The apex bank kept the cash reserve ratio (CRR) unchanged in its mid-quarter monetary policy.
The rupee weakened and the BSE’s benchmark Sensex fell on RBI’s warning.
Noting that risks on account of the current account deficit (CAD) remain significant, despite a likely improvement in the fourth quarter, RBI said, “Accordingly, even as the policy stance emphasises addressing the growth risks, the headroom for further monetary easing remains quite limited.”