People walk past Reserve Bank of India signage in front of an installation stall at Global Fintech Fest in Mumbai, India, on Aug. 28, 2024.
Indranil Aditya | Nurphoto | Getty Images
India’s central bank delivered an outsized cut to its benchmark policy rate, bringing it to 5.5% from 6%, its lowest level since August 2022.
This also marks a third straight rate cut since February, and comes below the median estimates of 5.75% in a Reuters poll.
The decision comes after a better-than-expected GDP growth figure in its fiscal fourth quarter, with the economy expanding 7.4% year-on-year compared to the 6.7% estimated by economists polled by Reuters.
However, the central bank held its full-year GDP estimate at 6.5%, marking a sharp slowdown compared to the 9.2% seen in the previous financial year, which ended in March.
The RBI had highlighted growth concerns in its previous meetings amid the threat of tariffs from the United States.
Separately, the decision also comes as India’s inflation is largely on a downtrend, which also affords the RBI room to cut rates.
The most recent headline inflation reading for April was at 3.16%, its lowest level since July 2019.
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