RBI rate cut indicates shift in monetary policy stance, says Arvind Subramanian

Arvind Subramanian, the finance ministry's chief economic adviser (CEA) on Thursday said that the inter-meeting rate cut by Reserve Bank of India (RBI) indicates a shift in its monetary policy stance.

The RBI on Thursday cut repo rate by 25 bps to 7.75 per cent from 8 per cent in a surprise inter-meeting cut yielding to signs of slowing inflation while acknowledging the government's efforts to contain the fiscal deficit.

The bank also adjusted the reverse repo rate to 6.75 per cent.

Deputy Finance Minister Jayant Sinha earlier welcomed the rate cut saying it reflected easing inflation concerns and vindicated the government's efforts to achieve economic growth without stoking inflation.