Reserve Bank of India cuts key rates

Today, the Reserve Bank of India (RBI) announced two important rate cuts. It has cut the repo and the reverse repo rates by 100 basis points each. So, the repo has been cut to 6.5% and the reverse repo has been cut to 5%. The RBI Governor has said that these rate cuts would allow the banks to cut rates and inject more money into the system. However, the last time, when these rate cuts were announced, the credit situation in India was so tight that it didn't make any major ripples. But I do feel that these are positive signals and makes it clear that the government is trying it's best to protect the economy from going into a tailspin due to depressing conditions, which have prevailed globally. I expect the markets to stage a smart recovery on Monday and this is what the government expects by making a rate cut on a Saturday.