RBI cuts interest rate by 0.25 per cent, Sensex zooms 600 pts, Jaitley hails decision

New Delhi

Encouraged by softening inflation, the RBI today decided to cut the benchmark interest rate by 0.25 per cent to 7.75 per cent with a view to boost growth.

The decision to reduce repo rate comes a fortnight ahead of the scheduled date of monetary policy announcement on February 3.

“It has been decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 8.0 per cent to 7.75 per cent with immediate effect,” Reserve Bank said in a statement today.

The RBI has been keeping the benchmark interest rate at elevated level at 8 per cent since January 2014.

Sensex zooms 600 pts, Nifty above 8,400 on RBI rate cut

The benchmark BSE Sensex climbed over 600 points and the NSE Nifty regained the 8,400-mark in opening trade today as rate-sensitive stocks led rally after the RBI in a surprise move cut repo rate by 0.25 per cent.

The 30-share index, which shed 238.45 points in the previous two sessions, rebounded by 600.77 points, or 2.19 per cent, to trade at 27,947.59.

All the sectoral indices, led by banking and realty were trading in the positive terrain with gains up to 3.01 per cent.

On similar lines, the National Stock Exchange index Nifty regained the psychological 8,400-mark by surging 176.05 points, or 2.12 per cent to, 8,453.60.

Brokers said sentiments buoyed largely on the back of the RBI’s surprise move to cut repo rate by 25 basis points to 7.75 per cent, triggering all-round buying, particularly in interest-sensitive stocks.

Besides, encouraging quarterly earnings by some blue-chip companies and a better trend at other Asian bourses boosted sentiments.

Among other Asian markets, Hong Kong’s Hang Seng index was up by 0.15 per cent, while Japan’s Nikkei moved up by 1.46 per cent in early trade today.

The US Dow Jones Industrial Average ended 1.06 per cent lower in yesterday’s trade.

Jaitley hails RBI decision to cut interest rate

Finance Minister Arun Jaitley hailed the decision of RBI to cut the interest rate, saying it is positive for the Indian economy and will certainly help in reviving the investment cycle the government is trying to restore.

“The RBI decision to cut the interest rate will lead to more money in the hands of the consumer for greater spending.

“It is positive for the Indian economy and it will certainly help in reviving the investment cycle the government is trying to restore,” said Jaitley who has been nudging the central bank to ease the interest rate to lower the cost of capital.

Earlier in the day, the RBI cut interest rate by 0.25 per cent to 7.75 per cent.

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