FM Arun Jaitley says RBI rate cut will help revive investment cycle

Finance Minister Arun Jaitley has said the Reserve Bank of India's 25 basis point cut in interest rates will help revive capital investments in Asia's third-largest economy.

Acting ahead of a scheduled monetary policy meeting on February 3 and the government's annual budget later in February, the central bank on Thursday surprised markets by lowering the repo rate - its key lending rate - to 7.75 per cent from 8 per cent, where it had been for the past year.

RBI also adjusted the reverse repo rate to 6.75 per cent but maintained cash reserve ratio at 4 per cent.

Investors cheered the move as BSE Sensex zoomed over 600 points after the announcement. The NSE Nifty too was trading over 2 per cent higher.

(Reuters)