India slashed its benchmark interest rate by a greater-than-forecast half a percentage point, seeking to bolster growth with the first reduction since 2009. Inflation might limit the room for further cuts, the central bank said.
Governor Duvvuri Subbarao lowered the repurchase rate to 8 percent from 8.5 percent, the Reserve Bank of India said in a statement in Mumbai today. The outcome was predicted by three of 25 economists in a Bloomberg News survey. Seventeen expected a 0.25 percentage-point cut and the rest predicted no change.
“We will do everything possible to maintain price stability,” Finance Minister Pranab Mukherjee said in New Delhi today. “The monetary policy announcement should help in investment revival and strengthen business sentiment. We will take some further additional steps in the coming weeks to reinforce growth focus.”
In the U.S., industrial production may have risen 0.3 percent in March from the previous month, according to the median forecast in a Bloomberg News survey ahead of a report today. Home starts increased to a 705,000 annual rate in March following a 698,000 pace the prior month, according to a Bloomberg survey median.
Prime Minister Manmohan Singh’s government, grappling with fiscal and trade gaps and depressed industrial output, faces one of the most challenging periods since taking office in 2004.