As had been expected, the Reserve Bank of India has reduced the bank rate as well as the cash reserve ratio (CRR) by 0.25 per cent. The bank rate has been reduced from 6.25 per cent to 6 per cent while the CRR has been cut from 4.75 per cent to 4.50 per cent, effective June 14, 2003. However, the repo rate has been left unchanged at 5 per cent. Although the RBI governor has cut key interest rates, he has expressed concerns about the growth in inflation.
Despite the rate cuts, yields of government securities rose marginally. The yield on the 10-year benchmark 9.81% GOI 2013 has inched up from yesterday's closing figure of 5.89 per cent to 5.92 per cent today. The fall in prices could be a result of profit booking as markets had already discounted a 0.25 per cent cut in both the bank rate and the CRR.
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