RBI cuts repo rate to four-year low by 50 basis points
RBI Governor Raghuram Rajan has, however, kept the cash reserve ratio ( CRR) unchanged at 4 per cent.
The RBI has already eased the policy rate by 75 bps so far this year.
"Since our last review, the bulk of our conditions for further accommodation have been met. The January 2016 target of 6 per cent inflation is likely to be achieved. In the monetary policy statement of April 2015, the Reserve Bank said that it would strive to reach the mid-point of the inflation band by the end of fiscal 2017-18. Therefore, the focus should now shift to bringing inflation to around 5% by the end of fiscal 2016-17," the RBI said.
"Despite the monsoon deficiency and its uneven spatial and temporal distribution, food inflation pressures have been contained by resolute actions by the government to manage supply," the RBI said in its policy statement.
The move was being expected with government policymakers and business leaders advocating a cut in interest rates to boost economic growth. However,analysts and economists have been expecting a 25 bps cut.
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