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Rajan Surprises Again With Bigger-Than-Forecast India Rate Cut

  • Rate cut by 50bps; only one of 52 economists predicted move
  • Policy must be "accommodative to the extent possible": Rajan
Bloomberg business news

Reasoning Behind India’s Aggressive Rate Cut

Updated on

India central bank Governor Raghuram Rajan built on his record of surprises with policy decisions Tuesday, taking advantage of a rout in commodity prices to lower borrowing costs by more than forecast.

Rajan, who unleashed emergency measures to prop up the rupee days after he took office and began this year with two unscheduled interest-rate cuts, lowered the benchmark repurchase rate by half a percentage point, to 6.75 percent. Most of the 52 economists surveyed by Bloomberg had predicted a quarter-point move, and just one made the right call.