India cuts interest rates by more than expected

India's central bank has cut its key interest rate for the fourth time this year, and by more than expected.

The Reserve Bank of India (RBI) reduced its repo rate to 6.75% from 7.25%, with economists having forecast it would trim rates to 7%.

The repo rate is the level at which the central bank lends to commercial banks.

The bank has been under pressure to boost growth after inflation hit a record low of 3.6% in August due to falling commodity prices.

The latest cut takes interest rates in the country to the lowest level in four and a half years.

The RBI had already cut the policy rate by a total of 75 basis points this year, following rate reductions in January, February and June, on the back of low inflation.

"In India, a tentative economic recovery is underway, but is still far from robust," RBI governor Raghuram Rajan said in a statement.

"Investment is likely to respond more strongly (and boost domestic demand) if there is more certainty about the extent of monetary stimulus in the pipeline."

(BBC)