Finance Ministry welcomes RBI rate cut, says it vindicates govt efforts

New Delhi: The finance ministry welcomed an inter-meeting rate cut by Reserve Bank of India (RBI) on Thursday, saying it reflected easing inflation concerns and vindicated the government’s efforts to achieve economic growth without inflation. Deputy Finance Minister Jayant Sinha also told Reuters that the quarter-point rate cut would mark an “inflection point” after a period of high interest rates. In a surprise move, the RBI cut the repo rate by 25 bps today morning to 7.75 percent, saying inflation has kept its declining path letting the central bank lower the guard and begin the easing cycle. [caption id=“attachment_2047475” align=“alignleft” width=“380”] AFP image[/caption] The move likely to prompt banks also to cut lending rates as most of the banks have already cut their deposit rates in the recent months. The RBI’s move has been fuelled by the sharper than expected decline in prices of vegetables and fruits since September. The falling price pressures in cereals and the large fall in international commodity prices, particularly crude oil, also aided the policy decision, the RBI said in the press release. More importantly, the RBI said it expected the crude oil prices to remain low for the next one year barring geo-political shocks.   with inputs from Reuters