India's central bank lowered its key interest rates by 25 basis points on Tuesday as widely expected by economists.
The Reserve Bank of India, governed by Raghuram Rajan, decided to cut its repo rate to 7.25 percent from 7.50 percent with immediate effect and the reverse repo rate was adjusted to 6.25 percent from 6.50 percent on Tuesday.
The bank reduced its key rates by 25 basis points each in January and March in unscheduled sessions.
The repo rate is the rate at which the central bank lends to commercial banks and the reverse repo rate is the rate at which it accepts deposits from banks.
The cash reserve ratio was also kept unchanged at 4.00 percent.
The bank today lowered its growth forecast for 2015-2016 to 7.6 percent from 7.8 percent with a downward bias to reflect the uncertainties surrounding various risks.
Inflation is expected to be pulled down by base effects till August but to start rising thereafter to about 6 percent by January 2016, which is slightly higher than the projections in April.
Rajan urged banks to pass through the sequence of rate cuts into lending rates.
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