ZCZC
BCN-29
INDIA-RATE-ECONOMY
India central bank makes fourth rate cut this year as growth slows
MUMBAI, Aug 7, 2019 (BSS/AFP) – India’s central bank on Wednesday cut
interest rates for the fourth time this year, as New Delhi battles sluggish
economic growth and high unemployment.
The Reserve Bank of India (RBI) said the benchmark repo rate — the level
at which it lends to commercial banks — would be reduced by 35 basis points
to 5.40 percent, taking rates to their lowest level since 2010.
“The monetary policy committee was of the view that a 25 basis point rate
cut was inadequate due to evolving global economic conditions while a 50
basis point cut would be excessive,” RBI governor Shaktikanta Das told
reporters.
“Hence, 35 basis points was viewed as a balanced level of cut due to the
current circumstances.”
All 36 economists surveyed by Bloomberg News had predicted the central
bank would cut rates by 25 basis points.
A fall in domestic demand lowered India’s growth rate in the last quarter
to 5.8 percent, with unemployment at its highest since the 1970s.
Indian carmakers including Mahindra & Mahindra have halted production and
reported falling sales as consumer demand fell throughout 2019.
“Domestic economic activity continues to be weak, with the global slowdown
and escalating trade tensions posing downside risks,” the central bank added
in a statement.
The RBI revised down its growth projection for 2019-20 from 7.0 percent to
6.9 percent, noting that the global economy has been losing pace.
Prime Minister Narendra Modi, who won a second landslide victory in recent
national elections, faces a massive challenge to create enough jobs for the
1.2 million Indians who join the labour market each month.
BSS/AFP/HR/1300