Financial Times

Central Bank repo and reverse rates fall

The Central Bank last week announced a reduction in its Repurchase (Repo) and Reverse Repurchase (Reverse Repo) rates by 75 basis points effective August 15 following trends that show declining inflation and inflation expectations.

The Bank Rate has also been revised downward from 18 percent to 15 percent in line with the reduction in other policy rates.

The bank said monetary expansion up to end June has been within the target set at the beginning of the year while there has been continuous excess liquidity in the market.

The containment of public sector borrowing, despite a possible shortfall in government revenue, has reduced pressure on domestic market interest rates, causing them to decline.

There has been continued stability in the foreign exchange market. Several international interest rates have also been gradually reduced.

It said the rupee market continued to remain liquid through 2003, supporting the recovery in the economy.