Reserve Bank of India (RBI) - cut interest rates by half a percentage point.
This is the lowest interest rate since May 1973. The last three years have
seen interest rates fall by a dramatic 3.5 percentage points to 6.5%
The Reserve Bank governor also restated a forecast of 5-6% in India's
economic growth, or GDP, in the current financial year. "Overall we expect
India to have one of the highest rates of growth in the world", said Dr
Jalan.
The bank was also pleased with a drop in inflation to 3.2%, from 7.4% a year
ago and a rise of nearly $15bn in foreign exchange reserves to $45bn.
The measures would make the "monetary and credit environment... positive for
growth and positive for industrial recovery", Dr Jalan told journalists soon
after announcing the mid-term review of monetary and credit policy.
But some observers believe that the cut is too small and uncertainty after
September 11 will fail to kickstart the economy.
- nriol.com report
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