NEW DELHI, Aug. 2 (Xinhua) -- India's central bank Wednesday cut its repo rate by 25 basis points to a seven-year low of 6 percent.
Repo rate is the short-term rate at which the central bank lends to banks.
The Reserve Bank of India (RBI) has also cut the reverse repo rate by 25 basis points to 5.75 percent.
This was the first rate cut since October 2016 and in line with market expectations as retail inflation fell to a more than five-year low of 1.54 percent in June. The inflation is the main consideration for the RBI's monetary policy committee (MPC).
"The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium- term target for consumer price index (CPI) inflation of 4 percent ... while supporting growth," the RBI said.
The repo rate cut was also the first since the Indian government's demonetization move in November last year and unveiling of the goods and services tax (GST) in July.
