India’s central bank cuts interest rates sharply

India’s central bank made a bigger-than-expected interest rate cut, lowering the repo rate by half a percent to 5.5%, the lowest level in three years.

 This is the third rate cut in a row as the country faces slower growth and falling inflation.

RBI Governor Sanjay Malhotra said the economy is growing slower than expected and the bank wants to encourage more spending and investment amid global uncertainties.

India’s economy grew 6.5% last year, still the fastest among big economies, but down from 9.2% the year before. Inflation has dropped to a six-year low of 3.16%, helped by falling food prices.

The central bank also increased money supply but shifted its policy stance to “neutral,” meaning future rate changes will depend on how growth and inflation develop.

Lower rates should help consumers with cheaper home and car loans and support companies by cutting borrowing costs. This could also boost India’s struggling real estate market, especially affordable housing, as lower mortgage payments make homes more affordable.

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