India Lowers Rates to Jump Start Growth
The Reserve Bank of India Wednesday cut its benchmark lending rate for the fifth time since October, noting that the impact of the global financial crisis on the country’s economy has been greater than anticipated.
The central bank cut the repurchase rate, its lending rate, by half a percentage point to 5.0%, it said in a statement.
It also trimmed the borrowing rate, or reverse repurchase rate, by an equal amount to 3.5%, to discourage banks from parking their surplus funds with the RBI.
The rate cuts, which are effective immediately, are aimed at reviving India’s once-booming economy, which is slowing sharply as exports slump and the capital inflows that helped fuel growth dry up. Bank-credit growth has slowed, while higher government borrowings have made it even more expensive for companies to raise funds from the market.
[Article originally posted on WSJ.com] Continue reading