India’s Central Bank Cuts Rates Amid Falling Inflation, Slow Growth

India’s central bank has lowered interest rates by a deeper-than-expected half a percent – the third cut in a row amid falling inflation and lower growth in Asia’s third largest economy.

It also increased the amount of liquidity – or supply of money – available in the system.

The repo rate – the level at which the central bank lends money to commercial banks, influencing borrowing costs for home and car loans – now stands at 5.5 per cent, the lowest in three years.

The rate cut comes on the back of two previous reductions in April and February.

Data released last week showed that India’s economy grew by 6.5 per cent in the previous financial year ending March.

The country remains the world’s fastest expanding major economy, although growth has sharply dropped from the 9.2 per cent high recorded in financial year 2023-24.

Meanwhile, retail prices in India have slowed faster than expected to 3.16 per cent in April – the lowest in six years – and below the RBI’s 4 per cent target, driven down by falling food prices.