Repo rate cut will moderate inflation: FM

New Delhi, Oct 20: Finance Minister P Chidambaram on Monday, Oct 20 said the repo rate cut by the Reserve Bank of India by 100 bps will stimulate growth and moderate inflation.

Reacting to the crucial decision of the Central Bank to cut repo rate cut by one percentage point, Mr Chidambarm told reporters here the decision was consistent with the government's objectives of bringing down the price level and giving a boost to economic growth. He said the rate cut would be beneficial for both borrowers and investors, and help investors carry forward their plans.

Unexpectedly the RBI this morning slashed its key repurchase rate for the first time since 2004, in a bid to shore up economic activity in the face of the global financial turmoil.

However,inflation remains in double digits.

The RBI cut its overnight lending rate to nine per cent from 8 per cent. The move came after the Central Bank's recent measures to boost liquidity, including a 250 bps reduction in the Cash Reserve Ratio (CRR) to 6.5 per cent.

UNI