DHAKA: India’s central bank lowered interest rates for a third time this year to spur private investment, and said it’d wait to assess monsoon rains before acting again.

Governor Raghuram Rajan cut the benchmark repurchase rate to 7.25 percent from 7.5 percent, the Reserve Bank of India said in a statement in Mumbai on Tuesday, reports The Straits Times.

The move, which takes the rate to the lowest since September 2013, was predicted by 33 of 41 economists in a Bloomberg News survey.

Seven saw no change and one expected a 50 basis-point cut.

While ‘a conservative strategy would be to wait’ for more certainty on how monsoon rains will affect inflation, weak investment means ‘a more appropriate stance is to front-load a rate cut today and then wait for data that clarify uncertainty’, Rajan said.

‘Meanwhile banks should pass through the sequence of rate cuts into lending rates.’

The move follows China’s cuts and comes just months before an expected increase in US interest rates that risks triggering outflows from emerging markets.

Room to ease policy may reduce if oil prices continue rising and monsoon rains are less than normal.

BDST: 1255 HRS, JUN 01, 2015
RR