The Reserve Bank of India (RBI) has cut the cash reserve ratio (CRR) by 50 basis points (bps) to 5.5% effective from January 28, 2012. This will improve liquidity in market.
In Past RBI hike 13 times policy rate in last one year. As inflation cool down in India in last 2 month. Food inflation and fuel inflation was a big problem for Indian government that leads to Common man.
So RBI hike rate in past to decrease liquidity from market. Now when inflation cool down and economy also start moving down RBI took a step for ahead in just cutting rate first time.
This may be a good sign for improving market and economy but ultimately world economy also matter a lot.
