The six-member Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) decided to reduce the key policy rate or the repo rate by 25 bps to 6.25%.
The rate cut is in line with expectations as retail inflation grew by 2.2% in December its slowest in the last 18 months.
“Continuing deflation in food items, a sharp fall in fuel inflation and some edging down of inflation excluding food and fuel contributed to the decline in headline inflation,” the RBI said.
While the decision to change the policy stance was unanimous, four out of six members voted for a rate cut while two opted for status quo.
This was the first policy under the new Governor Shaktikanta Das.