FX.co ★ India Cuts Rates Larger than Expected

The Reserve Bank of India (RBI) made a surprising decision at its May meeting, cutting the key repo rate by a substantial 50 basis points, bringing it down to 5.50%. This reduction exceeded market expectations, which had anticipated a cut of only 25 basis points. In addition, the RBI has adjusted its policy stance from 'accommodative' to 'neutral.' This latest move marks a total reduction of 100 basis points since February, resulting in the lowest borrowing costs since August 2022. The RBI's decision was influenced by a combination of easing inflation and persistent uncertainties related to global trade tensions.