In a surprise move RBI cut the lending rate by 25 basis points giving some succour to the liquidity strapped market in the twilight of FY 15.

The Reserve Bank of India cut interest rates today by 25 basis points to 7.75 per cent in a surprise inter-meeting cut, yielding to growing signs of slowing inflation and a flagging recovery.

1. Reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 8.0 per cent to 7.75 per cent with immediate effect

2. Keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liabilities (NDTL).

The wholesale price index for December, released on Wednesday, rose just 0.11 per cent year-on-year Wholesale prices were unchanged in November giving clear signs of stagnating economic growth.

In a bid to counter sagging growth and demand in the economy this measure might be too little too late. Steel sector has been plagued with lack of demand owing to absence of new infrastructure projects and dearer credit sapping construction activity. Steel consumption in India has crawled at meagre 1.4% growth (April-December) leaving the market oversupplied and prices dipping.

Q4 (Jan-March) is typically period of accelerated demand owing to project completion deadlines but this year is likely to be wash out.