The Reserve Bank of India (RBI) on Thursday cut its benchmark repo rate by 25 basis points to 7.75 per cent, signalling a major shift in its monetary policy stance.
Stocks surged after the surprise but modest rate cut- with the Sensex surging by over 450 points in the opening session. Bank shares led the rally on Dalal Street. The Indian rupee also gained by 41 paise to 61.77 against the US dollar.
In December, the central bank had indicated a change in monetary policy stance
The RBI has been keeping the benchmark interest rate at elevated level at 8 per cent
since January 2014.
The RBI, however, has decided to keep the cash reserve ratio, the portion of deposits which the banks are required to have in cash with the central bank, unchanged at 4.0 per cent.
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