The Reserve Bank of India has decided to reduce the repo rate under the Liquidity Adjustment Facility by 100 basis points to 8.0 per cent with immediate effect.
The global financial situation continues to be uncertain and unsettled. Even as countries directly affected by the turmoil have taken aggressive action to manage the crisis, confidence and calm is yet to be fully restored in the financial markets. Due to financial integration, this uncertainty is transmitting also to countries outside the epicenter of the crisis. India too is experiencing the indirect impact of the global liquidity constraint as reflected by some signs of strain in our credit markets in recent weeks, the Indian central bank said in a statement.
The cut is aimed at maintaining financial stability, he added.
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