New Delhi, Feb. 12 -- The Reserve Bank of India (RBI) last week cut its policy rate by 25 basis points from 6.5 percent to 6.25 percent. It also changed its policy stance back to "neutral" from "calibrated tightening". While the Monetary Policy Committee voted unanimously in favour of changing the stance, the rate cut decision was voted against by two of the six members of the committee. Most economists and market watchers did not expect a rate cut as well.
In support of the monetary easing, RBI noted that retail inflation, measured by y-o-y change in the CPI, declined from 3.4 percent in October to 2.2 percent in December. With regards to economic growth, it pointed out to the Central Statistics Office's GDP growth estimate of 7.2 percent...