RBI surprises with second early rate cut by 25bps

FXStreet (Mumbai) - The Reserve Bank of India (RBI) cut its repo interest rate by 25 basis points to 7.5% on Wednesday, in its second move this year outside official policy meetings on the back of easing inflation and what it said was "weak state" of parts of the economy.

The cash reserve ratio was kept unchanged at 4%.

RBI Governor Raghuram Rajan said in a statement, "Given low capacity utilisation and still-weak indicators of production and credit off-take, it is appropriate for the Reserve Bank to be pre-emptive in its policy action to utilise available space for monetary accommodation."

The RBI had lowered interest rates by 25 bps on Jan 15.