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India cuts rates after 9-month wait, RBI stays cautious

Published on Jan 29, 2013 8:32 PM
 
Reserve Bank of India (RBI) governor Duvvuri Subbarao speaks during a press conference in Mumbai on Jan 27, 2013. India's central bank lowered its key policy rate for the first time in nine months on Tuesday, but struck a cautious note on further easing as it waits to see how the government's upcoming budget aims to bring a bloated fiscal deficit under control. -- PHOTO: AFP

MUMBAI (REUTERS) - India's central bank lowered its key policy rate for the first time in nine months on Tuesday, but struck a cautious note on further easing as it waits to see how the government's upcoming budget aims to bring a bloated fiscal deficit under control.

The Reserve Bank of India cut the policy repo rate by 25 basis points (bps) to 7.75 percent to help support an economy set to post its slowest annual growth rate in a decade.

The RBI revised its GDP growth forecast for Asia's third-largest economy to 5.5 percent from 5.8 percent for the current fiscal year ending in March, a sharp come down for an economy that was running at near double-digit growth before the Lehman Brothers crisis.

Though respectable by other standards, the growth rate is too slow for an economy trying to support hundreds of millions of poor people, and is a worry for the ruling Congress party as it heads towards an election next year.

 
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