India makes sur­prise in­ter­est rate cut, Aus­tralia stands pat

The Sun (Malaysia) - - SUNBIZ -

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

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