As officials attempt to stop India’s most populous nation’s slowing economic growth, the central bank of India has reduced its benchmark interest rate for the first time in nearly five years.
The Reserve Bank of India (RBI) said on Friday that it had lowered the repo rate, which the central bank lends to commercial banks, by 0.25 percent to 6.25 percent.
The RBI made a number of increases in May 2020 after the last key interest rate cut, with the goal of halting rising inflation in the wake of the COVID-19 pandemic.
In light of the “growth-inflation dynamics” at play right now, Governor Sanjay Malhotra, who succeeded Shaktikanta Das as governor in December, said a less restrictive monetary policy was preferable.
“We are committed to conduct monetary policy and take such measures, as appropriate, which are timely, carefully calibrated and clearly communicated, to facilitate conducive macroeconomic conditions that reinforce price stability, sustained economic growth and financial stability”, Malhotra said.
India’s economy is expanding more quickly than any other major economy, but consumption has fallen off significantly in recent months as a result of rising food prices.
Gross domestic product (GDP) grew 5.4 percent year on year in the July-September quarter, after expanding 6.7 percent in the April-June period and 7.8 percent in the quarter before that.
The 2024/25 fiscal year’s growth, according to Prime Minister Narendra Modi’s government, will be 6.4%, which would be the worst performance since COVID-19, which ended the world economy in 2020.
Growth is expected to come in at 6.3-6.8 percent in 2024/25, below its post-pandemic trend.
Source: Aljazeera
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