The Reserve Bank reduced interest rates to 0.25 per cent

The Reserve Bank reduced interest rates to 0.25 per cent

Nearly nine months after the change in the approach Kade monetary policy interest rates by the Reserve Bank today announced a 0.25 percent reduction.

The central bank, the banking system has also provided additional cash of Rs 18,000 crore. These measures reduce the cost of borrowing from the central bank as well as the economy will be slow.

Reserve Bank Governor D Subbarao today while presenting the third quarter review of monetary policy, short-term lending rate (repo rate) cuts announced in the quarter surprised. The repo rate has come down to 7.75 per cent now. Accordingly, the cash reserve ratio (CRR) by 0.25 per cent to 4 per cent of it has been cut.

The banks and other lending to meet the needs of additional cash will be available for Rs 18,000.

A certain proportion of deposits banks have to keep with the central bank, which is called the CRR. On the other hand, the need for a central bank to bank short-term lending rate at which the charge is called the repo rate.

Subbarao said inflation risks in the wake of the quarter under review has attempted to provide reasonable interest rate environment. However, the Reserve Bank for the current financial year 2012-13 estimate of 5.8 percent economic growth rate has reduced from 5.5 per cent. In addition, estimates of the rate of inflation is too low. The Central Bank by March-end inflation was estimated at 7.5 per cent, which has now been reduced to 6.8 percent.

Subbarao said inflation easing of monetary policy by the Watawarn path of economic growth, fiscal and other measures to reduce the risk to have the flexibility to combine. Reserve Bank Governor Mne corrective steps taken by the Government appreciated. These multi-brand retail sector foreign direct investment (FDI) in addition to the normal tax exemption anti-avoidance rule (Gar) postponing the implementation date and price controls on diesel from the partial decide to include.

Cut in interest rates after the stock market received overwhelming response. Bombay Stock Exchange's Sensex 20194.06 points, with growth of 91 points was reached.

Planning Commission Deputy Chairman Montek Singh Ahluwalia said the CRR cut will reduce long-term interest rates.Bank of India Executive Director N Seshadri said that most bank customers will benefit from this deduction. Yourselves would cut interest rates on loans and deposits.

Canara Bank Executive Director AK Gupta said banks cut interest rates after the Reserve Bank will consider the move. The repo rate in April was cut in 2012. Repo rate cut has with immediate effect.

CRR cut will be effective from February 9.