MUMBAI Jan 29 India's central bank reduced its
policy interest rate by a widely expected 25 basis points on
Tuesday, taking comfort from cooling inflation as it made the
first cut in nine months to support an economy headed for its
slowest growth in a decade.
The Reserve Bank of India cut its key repo rate
to 7.75 percent, as forecast by a Reuters poll.
The RBI unexpectedly also reduced the cash reserve ratio
(CRR), the share of deposits banks must keep with
the central bank by 25 bps to 4.00 percent, which will infuse an
additional 180 billion rupees into the banking system.
The central bank said there was increasing likelihood of
inflation remaining rangebound around current levels heading
into 2013/14 fiscal year starting April.
"This provides space, albeit limited, for monetary policy to
give greater emphasis to growth risks," the central bank said in
its quarterly monetary policy review.
(Reporting by Suvashree Dey Choudhury and Aradhana Aravindan)