India’s central bank cuts lending rate to 5.75%

NEW DELHI – India’s central bank has cut its key interest rate by a quarter of a percentage point to 5.75% from 6% with immediate effect to fortify the economy as consumer spending and corporate investment falter.

The interest rate is what the Reserve Bank of India charges on lending to commercial banks. In a bimonthly review of the economy released on Thursday, it also decided to change the stance of monetary policy from neutral to accommodative

The central bank noted that inflation remains below its target, even after earlier rate cuts. It also expressed concern over a sharp slowdown in consumer demand and investment.

Lower interest rates help make credit cheaper for borrowers, though they can also spur inflation.