RBI tango with FM gives 1st rate relief in five yrs

Interest rate cut by 25 bps; guv says RBI will support growth while keeping inflation down

- BENN KOCHUVEEDAN @Mumbai

SEEKING to build on the feel-good factor generated by the Budget, which announced significant tax cuts, the Reserve Bank of India on Friday cut interest rates by 25 basis points to 6.25%. This is the first rate cut in five years and, together with the income tax relief, could give a big boost to consumption-driven growth.

The immediate impact of the rate cut is that it will make home, auto, and small business loans cheaper; loans on floating interest rates will automatically come down by 25 bps.