India cuts its interest rates

India’s central bank cut the interest rate for the first time in three years yesterday in an attempt to boost its sagging economy. The Reserve Bank of India cut rates by 50 basis points, double the expected 25 basis point cut and leaving its main interest rate at eight per cent. The news was well-received, with bond yields falling sharply. However, the Bank warned there would be little room for further cuts in future, as inflation is expected to remain high and growth is on track to pick up, albeit modestly – though analysts suggested any fall in commodity prices could change that view.