India cuts interest rates just before Modi’s election test

New Delhi (CNN Business)India’s new central bank governor just gave the country its first interest rate cut in six months ahead of elections in which the health of the economy will play a key role.

The Reserve Bank of India (RBI) reduced the key rate at which it lends to banks from 6.5% to 6.25% on Thursday, surprising most economists polled by Reuters and Bloomberg who had predicted rates would remain unchanged.
The RBI, now led by former finance ministry official Shaktikanta Das, cited a drop in inflation, lower oil prices and a global economic slowdown as factors behind its decision. Retail inflation in India fell to 2.2% between October and December, its lowest level in 18 months, while core inflation dipped to 5.6%.

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