Encouraged by softening inflation, the RBI today decided to cut the benchmark interest rate by 0.25 per cent to 7.75 per cent with a view to boost growth.
The decision to reduce repo rate comes a fortnight ahead of the scheduled date of monetary policy announcement on February 3.
"It has been decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 8.0 per cent to 7.75 per cent with immediate effect," Reserve Bank said in a statement today.
The RBI has been keeping the benchmark interest rate at elevated level at 8 per cent since January 2014.
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