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USD/INR Flat After Reserve Bank of India Cuts Interest Rates

October 4, 2019 at 12:08 by Vladimir Vyun

Indian rupee denominationsThe Indian rupee traded about flat versus the US dollar today following an interest rate cut from India’s central bank. The bank loosened its monetary policy to support economic growth, which is struggling amid the global economic slowdown.

The Reserve Bank of India cut its main interest rate by 25 basis points to 5.15% today in a unanimous vote. Such a decision was largely expected by analysts. The central bank signaled that it will keep monetary policy accommodative as long as it is needed to support economic growth:

The MPC also decided to continue with the accommodative stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target.

The RBI joined other central banks around the world, which are easing their monetary policies amid the threat of a global economic slowdown. Geopolitical tensions, especially the trade conflict between the United States and China, are disrupting global growth, and weaker emerging economies are especially vulnerable. India’s economy certainly feels the pressure as the growth slowed to the six-year low of 5%, year-on-year. And while policymakers expect it to recover a bit, they downgraded their forecast for 2019–20 to 6.1% from 6.9% in their August assessment.

USD/INR was flat at 70.89 as of 12:07 GMT today.

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