India’s central bank cuts key lending rate to 6 per cent

NEW DELHI – India’s central bank has cuts its key interest rate by a quarter of a percentage point, raising hopes of lower borrowing costs for households as inflation ebbs.

The announcement by the Reserve Bank of India on Wednesday reduced its repo rate to 6 per cent. This is the rate at which the central bank lends to commercial banks.

India’s inflation rate declined to a record low of 1.54 per cent in June, while the annual rate of growth in factory output fell to 1.7 per cent in May from 8 per cent a year earlier.

Most industrial groups had been pushing for an interest rate cut to help boost the economy by lowering the cost of borrowing.