In a bid to boost lending and revive domestic demand, the Reserve Bank of India (RBI) lowered the amount of money that banks need to keep in reserves, cutting the Cash Reserve Ratio (CRR) by 25 basis points to 4.5%.
Friday’s data showed that the inflation rate rose to a higher-than expected 7.55% in August from a year earlier. Most analysts had expected the rate to be about 6.95%.
India’s Central Bank is put under pressure to lower the interest rate, but the interest has remained unchanged at 8.0%.
Analysts said the RBI’s decision not to reduce interest rates shows that the central bank is still concerned about the high inflation rate.