RBI to cut interest rates : FICCI

Industry body FICCI has suggested that the Reserve Bank should cut interest rates in its monetary policy review later this month, after the US central bank reduced key rates. "RBI must cut the repo rate by at least 25 basis points and then follow up with further cut of another 25 basis points within next two months," the chamber said in release. Pointing out that inflation is within "tolerable limits", it said that RBI needs to address the issue of industrial slowdown by reducing interest rates. RBI is scheduled to review the monetary policy on January 29. The US Federal Reserve yesterday cut Fed funds rate and discount rate by 75 basis points to 3.5 per cent and 4 per cent respectively to prevent the domestic economy from going into recession. In India, RBI has kept a tight monetary stance to control inflation, which crossed the six per cent mark early in 2007. But the increase in interest rates affected credit offtake in the economy, causing a slowdown in the growth of industrial production. For quite some time now, inflation rate has been below RBI's tolerance level of five per cent for this fiscal, raising expectations for a cut in interest rates. – www.economictimes.com