Low inflation allows India's Reserve Bank to cut key lending rate

NEW DELHI – India's central bank unexpectedly cut a key interest rate by a quarter percentage point, the second such cut this year because of lower inflation.

Wednesday's cut brings the policy repo rate, at which commercial banks can borrow from the Reserve Bank of India, to 7.5 percent.

The Reserve Bank of India made a similar cut in the key rate in January.

Inflation in India has lowered substantially as global oil prices have dropped sharply.

The RBI said in a statement that inflation in January was 5.1 percent, well below the government's upper limit of 8 percent for the month.