India refuses to slash rates

THE RESERVE Bank of India has flouted calls to cut interest rates or to reduce banks’ cash reserve requirements, opting yesterday not to provide more monetary stimulus for the country.

India’s central bank chose to keep the repo rate at eight per cent and the cash reserve ratio at 4.75 per cent, in order to prevent inflation getting out of hand – rather than seeking to jolt the flagging economy into growth.

Yet Rahul Bajoria, an economist at Barclays, said rates could still be cut by about one per cent after the bank’s next review on 31 July.