The Reserve Bank of India (RBI) left interest rates on hold today but cut the cash reserve ratio for banks, defying pressure from the government to lower rates for the first time since April but also indicating it may soon ease policy further. The policy repo rate remains unchanged at 8 percent. The RBI however lowered the cash reserve ratio by 25 basis points to 4.25 percent, a move it said would inject about 9.74 lakh crore rupees into the banking system in order to pre-empt potentially tightening liquidity. Headline wholesale price index inflation rose to 7.8 percent in September, a 10-month peak, and the RBI said it expects inflation to rise before easing in the final quarter of the fiscal year, which ends in March.
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