RBI to work with government to ensure rate cut transmission, says Raghuram Rajan

The Reserve Bank of India (RBI) will work with the government to ensure that the benefits of a cut in the policy interest rate is passed on by commercial banks through reductions in their lending rates, RBI Governor Raghuram Rajan said on Tuesday.

On Tuesday, the central bank cut its policy interest rate to a 4-1/2 year low of 6.75 percent, in a bigger-than-expected move that, with inflation running at record lows, could help an economy in danger of slowing down.

Rajan also said the RBI is comfortable with inflation levels with food prices continuing to fall.

(REUTERS)