India cut interest rates for the first time in nearly five years to hit slowdowns in growth

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The central bank of India has lowered its benchmark interest rates for the first time in nearly five years to boost economic growth and reverse a huge downturn in the world’s most populous country.

The decision to reduce the title repo rate by 0.25 percentage points is consistent and widely expected by economists.

“At present, monetary policy is less and monetary policy is more appropriate,” said Reserve Bank of India Governor Sanjay Malhotra, who added that inflation is expected to be from 5.2% in December’s title The rate continues.

The Reserve Bank of India’s move comes as policymakers try to resume the slowdown. India is still recording the fastest GDP growth in any major country, but it is struggling to cope with pressures from rising prices, stagnant wages, weak consumption and a disappointing array of corporate earnings.

As of the end of September, GDP growth rate dropped to 5.4%, the lowest in the past two years. The government forecasts growth rate for the fiscal year to be 6.4%, with its weakest rate in four years down from 8.2% in 2023-24.

New Delhi’s decision to appoint Malhotra instead of conferring his hawkish predecessor Shaktikanta Das to his third term, many economists believe Prime Minister Narendra Modi Higher borrowing costs are no longer tolerated.

India has steadily increased its buyback rate after the coronavirus pandemic, which included rising prices that rose to poor rural and middle-class spending capacity.

Led by Das, the Reserve Bank of India (RBI) set the tax rate at 6.5% in two years, and the Modi government has been criticized by the Modi government despite inflation violating the end of last year. .

Although India’s currency hits new lows, it is also true. The rupee lost about 2% of its value this year, raising concerns about import inflation.

Since Malhotra took over, the central bank announced a batch of $18 billion measures last month to drive liquidity to India’s banking industry, which many economists believe is an early migration of the new governor to Make monetary policy more relaxed.

Modi also tried to strengthen domestic consumption, including tax relief for middle-class families in the budget last week. Finance Minister Nirmala Sitharaman said the move would “take more money in hand and increase household consumption, savings and investment.”