The Reserve Bank of India (RBI) decided to cut interest rates unexpectedly on Friday in an emergency move to bolster the nation’s economy affected by the virus outbreak. The RBI’s move joins many other stimulus-boost efforts by central banks around the world.
Its benchmark rate was cut by 75 basis points from 5.15% to 4.40% according to Governor Shaktikanta Das after an urgent meeting with its ratings panel. The RBI’s rate cut is its first since December last year where rates were cut five times prior.
The decision was made ahead of a Monetary Policy Committee meeting scheduled for March 31 and shared similarities with a surprise move done by the U.S Federal Reserve in order to stave off a recession.
Das had earlier expressed that he was open to cutting interest rates as the spread of the virus worsened. With inflation above the upper end of the RBI’s 2%-6% target band, declining oil prices are expected to curb price pressures.