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RBI rate cut: FE's Sunil Jain explains

Jan 29 2013 00:00 IST
RBI surprised with a CRR rate cut. FE explains what it entails. Shedding its 9-month long hawkish monetary policy stance, the Reserve Bank of India (RBI) today cut its key interest rates by 0.25 per cent and released Rs 18,000 crore additional liquidity into the system to perk up growth through reduced cost of borrowing. RBI Governor D Subbarao in the third quarter monetary policy review surprised the market by cutting short-term lending rate called repo by 0.25 per cent to 7.75 per cent and Cash Reserve Ratio (CRR) by similar margin to 4 per cent, releasing Rs 18,000 crore primary liquidity into the system.