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India’s central bank cuts key rates, cites ‘unsettled’ conditions

MUMBAI, November 1, 2008 (AFP) - India's central bank unexpectedly cut its key lending rate for the second time in two weeks Saturday and took other steps to spur economic growth and counter fallout from the global financial crisis.
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The Reserve Bank of India, citing "unsettled" financial conditions, reduced its key short-term lending rate, the repo, by 50 basis points to ease a credit crunch. The repo is the rate at which it lends funds to commercial banks.

"The central bank is sending the message that it will provide stimulus for India's economy to grow by at least 7.0 to 7.5 percent" in this financial year to March 20009, said Bank of Baroda economist Rupa Rege Nitsure.

As part of a triple-prong move, the bank also cut the amount commercial banks must keep in reserve, easing the cash reserve ratio to 5.5 percent from 6.5 percent -- pumping billions of dollars into the financial system.

And in another stimulus step, it cut the statutory reserve ratio -- the amount banks must hold in government securities -- to 24 percent from 25 percent to boost liquidity for the first time in over a decade.

Banks around the world have been lowering rates this week with the US Federal Reserve slashing its main policy rate to

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