India’s central bank cuts interest rates

urjitpatelIn an effort to boost the economy India’s central bank has cut a key interest rate to its lowest level in almost 6 years.

In the first interest review under the new governor of the bank, Urjit Patel, who took over last month, the bank cut its benchmark repo rate to 6.25% from 6.50%.

While Patel’s predecessor was in sole charge of rate setting, the latest cut was decided by the newly formed policy committee.

Mr Patel replaced Raghuram Rajan who announced he was stepping down earlier this year. He is known to take a tough line on inflation, which is still one of the big worries in the Indian economy.

The Reserve Bank of India did not say how members of the six-strong committee voted. Many see this as a signal Patel wants to keep a low profile unlike Raghuram Rajan who was famous for his frank interactions and statements.

Inflation is expected to keep falling in the coming months, following a good monsoon season that brought down food prices.

All things considered India is one of the fastest expanding economies in the world.