India makes surprise interest rate cut, Australia stands pat
MUMBAI: India’s newly minted monetary policy committee delivered a surprise 25-basis-point cut in the repo rate yesterday to 6.25%, as Reserve Bank of India (RBI) governor Urjit Patel presided over his first policy review since his appointment last month.
The latest cut extends an easing cycle that began in January 2015 under Patel’s predecessor Raghuram Rajan and reduces the repo policy rate to its lowest since November 2010.
All six-members of the committee – comprising Patel, two other RBI officials and three government appointed economists - voted for a cut.
The RBI said expectations that food inflation would ease in the months ahead had “opened up space for policy action”.
The committee, which was meeting for the first time, was introduced to make decision-making more transparent and more collegiate. Hitherto, the RBI governor had taken sole responsibility for deciding rates.
The last reduction was in April, and analysts had braced for a close vote this time.
In another development, Australia’s central bank kept interest rates at a record low 1.5% yesterday in the first meeting for newly-minted chief Philip Lowe, amid solid domestic growth and signs that commodity prices have passed their trough.
The decision to sit on the sidelines was widely tipped by economists, and the Australian dollar drifted slightly lower to 76.67 US cents, from 76.76 US cents, after the statement was released. – Agencies