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India slashes interest rates by 50 bps

Sep. 29, 2015 3:28 AM ETIIF, INP, FNI, EPI, PIN, INR, ICN, INDY, INDL, INXX, SCIN, INCO, INDA, SMIN, GLINBy: Yigal Grayeff, SA News Editor9 Comments
  • The Reserve Bank of India has reduced its policy interest rate by a greater-than-expected 50 basis points to a four-and-a-half-year low of 6.75%, citing low inflation as a main reason.
  • The reduction follows three cuts of 25 bps this year and record-low consumer inflation of 3.66% in August amid falling commodity prices, well under a target of 6% for January.
  • "The weakening of global activity since our last review suggests that commodity prices will remain contained for awhile," RBI Governor Raghuram Rajan forecast. Domestic demand needs to increase in order to make up for weaker global growth, Rajan said. "Monetary policy has to be accommodative to the extent possible" in current conditions.
  • The RBI's move also comes after Q2 GDP came in at a a slower-than-expected annualized rate of 7%; today, the bank cut its FY forecast to 7.4% from 7.6%.
  • The BSE Sensex is +0.3%, while the USD-INR is -0.5% at 65.99 rupees.
  • ETFs: EPI, INDY, SCIF, INDL, PIN, INDA, INP, IIF, INXX, INCO, SCIN, ICN, INR, SMIN, FNI

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