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Rate cut consistent with Govt policy says, Chidambaram

New Delhi, Mon, 20 Oct 2008 ANI

New Delhi, Oct 20 (ANI): Finance Minister P. Chidambaram today said that the 100 basis point cut in repo rate by the Reserve Bank of India (RBI) is consistent with the government's policy of maintaining growth and moderating inflation.


Talking to reporters here, Chidambaram said the rate cut would be beneficial for both borrowers and investors, and help investors to carry forward their plans.


"The cut in the repo rate is consistent with our objective of moderating inflation and ensuring satisfactory growth rates. It will be beneficial to many sections of the people especially borrowers and investors. I hope it will enthuse investors to continue to take forward their investment proposals," he added.


India's central bank on Monday cut its key short-term lending rate by 100 basis points to 8.0 per cent to alleviate pressures caused by the global financial crisis and maintain financial stability.


The cut in the repo rate, which takes immediate effect, came ahead of a scheduled policy review on Friday.


The central bank may cut its short-term lending rate at a policy review on October 24 as a buffer against the global financial crisis and economic downturn.


The Indian rupee strengthened and bond yields fell after the RBI cut its key lending rate, the repo rate.


The main 30-share BSE index extended gains to 5.6 per cent up on the day.


The rupee rose to 48.72 per dollar from 48.80 before the rate cut was announced.


The government and the central bank have taken a number of measures over the past month to ease cash conditions and staunch the effects of the global financial crisis, including cutting banks' cash reserve requirements. (ANI)


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