RBI cuts key policy rate by 0.25 percent

The Reserve Bank of India (RBI) Friday cut a key policy rate by 0.25 percent. This will make auto, housing and other loans cheaper and help accelerate economic growth.

Repo rate, the rate at which the central bank lends to commercial banks, has been cut by 0.25 percent to 7.25 percent.

The reverse repo rate, the rate that RBI pays to commercial banks on their parked money, has been cut to 6.25 percent.

"The policy action undertaken in this review carries forward the measures put in place since January 2012 towards supporting growth in the face of gradual moderation of headline inflation," the RBI said in its annual monetary policy for the financial year 2013-14.

The central bank has left the cash reserve ratio unchanged at 4 percent.

"Recent monetary policy action, by itself, cannot revive growth. It needs to be supplemented by efforts towards easing the supply bottlenecks, improving governance and stepping up public investment, alongside continuing commitment to fiscal consolidation," the central bank said.