Gulf News

In­dia holds rates steady as growth slows

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In­dia’s cen­tral bank kept in­ter­est rates un­changed yes­ter­day af­ter Asia’s third-largest econ­omy slowed ahead elec­tions next year.

The Re­serve Bank of In­dia (RBI) said the bench­mark repo rate — the level at which it lends to com­mer­cial banks — would re­main at 6.50 per cent. It was the sec­ond meet­ing in a row that the bank has kept bor­row­ing rates sta­ble fol­low­ing two rises this year.

The de­ci­sion was “con­sis­tent with the stance of cal­i­brated tight­en­ing of mon­e­tary pol­icy in con­so­nance with the ob­jec­tive of achiev­ing the medi­umterm tar­get for con­sumer price in­dex (CPI) in­fla­tion of 4 per cent,” the bank said.

In­dia last week re­ported slow­ing eco­nomic growth, ex­pand­ing 7.1 per cent in the July-to-Septem­ber quar­ter, down from 8.2 per cent in the pre­vi­ous pe­riod.

An­a­lysts say In­dia needs to reg­u­larly record growth of at least eight per cent to gen­er­ate em­ploy­ment for the mil­lions en­ter­ing the work­force each year.

In­fla­tion re­mains tame how­ever, eas­ing to 3.31 per cent in Oc­to­ber, be­low the RBI’s 4-per cent tar­get band.

The slow­down in growth was on the back of a liq­uid­ity crunch in the bank­ing sys­tem, linked to prob­lems in the shadow bank­ing sec­tor, hit­ting in­vest­ment. of

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