WSAW - My Capture
Mar 4, 1:00 AM EST

Low inflation allows India's central bank to cut lending rate, support efforts to boost growth


World Video

Photo Gallery
'Slumdog' kids return to Mumbai's wretched slums
Latest News
AP PHOTOS: Indian widows, traditionally shunted aside, join riotous spring festival of Holi

Low inflation allows India's central bank to cut lending rate, support efforts to boost growth

Nuclear rivals India, Pakistan agree to find common ground although future talks unclear

India's new budget aims to balance high economic, infrastructure growth with welfare spending

Indian court acquits 6 men of killing 3 British men during 2002 religious riots

Buy AP Photo Reprints
Multimedia
A district summary of the Beige Book
Measuring economic stress by county nationwide
Mall malaise: shoppers browse, but don't buy
Unemployment by the numbers
Family struggles with father's unemployment
Saying an affordable goodbye
Hard times hit small car dealer
Latest Economic News
A robust US job market, despite harsh winter weather, is expected to keep delivering

Egypt to present some 50 projects valued at $35 billion during major investment conference

Bank of England keeps interest rates steady and refrains from pumping money into the economy

China lowers economic growth target, promises to open more industries to foreign investment

German factory orders show unexpectedly large fall in January, led by lower eurozone demand

Hotels, restaurants and wholesalers expand as consumer spending lifts US economy

AP survey: Cheap oil and lower interest rates are brightening outlook for global economy

Poland slashes interest rates to historic low of 1.5 percent to fight deflation risk

Retail sales in eurozone rise at fastest since May 2013, in latest sign of economic strength

To boost economy without easing grip on power, N. Korea gives managers, farmers more authority

Interactives
Greece's Debt Threatens to Spread
State budget
gaps map
Auto industry problems trickle down, punish Tennessee county
Women give old Derby hats a makeover in tough economy
S.C. town deals with highest unemployment in South
How mortgages were bundled and sold as securities
Tracking the $700 billion financial bailout
Tracking the year's job losses
State-by-state foreclosures since 2007
Credit crisis explained
Presidents and their economic legacies
Lexicon of the financial crisis
Americans' addiction to debt

NEW DELHI (AP) -- India's central bank on Wednesday unexpectedly cut a key interest rate by a quarter percentage point, the second such reduction this year as the bank lends support to government efforts to boost economic growth.

The latest cut lowers the policy repo rate, at which commercial banks can borrow from the Reserve Bank of India, to 7.5 percent. The Reserve Bank of India also cut the rate by a quarter point in January.

Previously, the central bank was reluctant to lower interest rates because doing so would likely worsen stubbornly high inflation. But India's inflation rate has fallen substantially in recent months as global oil prices have dropped sharply.

"Softer readings on inflation are expected to come in" over the next year, RBI governor Raghuram Rajan said in a statement.

Inflation in January was 5.1 percent, well below the government's upper limit of 8 percent for the month.

India's economic growth averaged about 8 percent a year in the decade up to 2010 but slumped to about 5 percent in the following years. Unpredictable government policy decisions, widespread corruption and other problems hindered business investment, causing growth to slump.

India's Prime Minister Narendra Modi won national elections in May by a staggering majority on the back of a promise to revive the country's sputtering economy and create more jobs.

The RBI's recent rate cuts have taken place outside of scheduled meetings and have surprised financial markets. The Sensex stock index in Mumbai was up 0.9 percent at 29,857.40 at 0540 GMT.

The central bank's move comes days after India's Finance Minister Arun Jaitley announced in the new government's first annual budget that it would boost spending to jumpstart Asia's third-largest economy.

Jaitley also promised to keep a tight watch on fiscal deficit. But he said that the need for higher public spending on infrastructure meant that the government would reach its fiscal deficit target of 3 percent of the GDP in three years rather than the two years earlier targeted.

© 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.

WSAW-TV 1114 Grand Ave. Wausau, WI 54403
Gray Television, Inc. - Copyright © 2002-2013 - Designed by Gray Digital Media - Powered by Clickability
User Agent: Mozilla/5.0 (Windows NT 6.2; WOW64; rv:21.0) Gecko/20100101 Firefox/21.0