The Reserve Bank of India on Saturday decided to reduce the one-day and 14-day repo rate under the liquidity adjustment facility by 0.5 per cent to 4.5 per cent with effect from Monday.
Will work full day on other Saturdays; bank branches to be shut on 2nd, 4th Saturday from next month
The additional measures to check exchange rate volatility comes within 10 days of RBI taking stern steps to suck out liquidity from the system.
The repo rate, at which the central bank lends to the system, will come down to 5.75 per cent after the cut.
Reflecting nervousness over the prospect of the Federal Reserve tightening policy and event risk, traders stayed on the sidelines
Financial services firm AnandRathi analysed the key points of the policy soon after it was announced.
The Reserve Bank of India (RBI) kept its key policy repo rate unchanged at 8.0 percent on Tuesday, as widely expected, while expressing concerns about risks to its target to bring consumer inflation down to 6 percent by January 2016.
Interest rate sensitive stocks gain ground post decision
In September, the headline inflation accelerated to a seven-month high of 6.46 per cent, while the retail inflation quickened to 9.84 per cent.
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The Reserve Bank is scheduled to unveil its first quarter review of the monetary policy on July 30.
CRR remains unchanged at 4%; first repo rate cut since May 2013.
Broking firm Jefferies says Indian financial system is now flooded with the kind of liquidity witnessed in 2005-07 and 2009-10
Thanks to Rajan we are an inflation-targeting country now
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Bankers remained ambivalent on the impact of Tuesday's policy announcement by Reserve Bank on the cost of funds and refrained from giving a guidance on the direction in which lending rates are headed.
The Reserve Bank of India cut its repo rate by 25 basis points to 6.50 per cent.
Over to the government how they manage the uncertainty of monsoon and revive spending in order to entice RBI for another round of rate cuts
A comprehensive technical framework needed, from which a more convincing policy could be demonstrated
The Urjit Patel committee on monetary policy framework has proposed setting up of a monetary policy committee (MPC) that will be headed by the Reserve Bank of India (RBI) governor and accountable for achieving inflation target set by it.
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