Indian Rupee Choppy vs Pound as RBI Cuts Interest Rates
The Reserve Bank of India has cut interest rates by 0.25% at its rate meeting on Wednesday, as widely expected.
The cut leaves the benchmark interest rate at 6.00% percent.
It is the first rate cut so far this year, bringing borrowing cost to the lowest since 2010 amid a sharp slowdown in inflation.
India's Rupee weakened temporarily following the news, spiking up to 84.60 from 84.40, as lower interest rates generally mean a weaker currency as they reduce inflows from investors seeking to park their money where they can earn the highest return.
The recent sharp fall in inflation was seen as a major reason for the move.
The hindustantimes online noted how inflation had “consistently fallen, registering a more than five-year low in June. With the latest reading at 1.54%, the retail inflation is below the MPC’s target range of 2-6%.”
Growth has also slowed to 6.1% in March from over 7.0% in 2016 when it topped world rankings – lower rates, it is thought, will help boost growth by reducing loan repayments for both companies and individuals.
However, the news website also noted that there were signs inflation was set to pick up during the summer, with food inflation rising to between 3.5-4.5% between march and October.
