By Daniel Hunter
The Reserve Bank of India (RBI) has cut its interest rate to 7.77% thanks to lower than expected inflation.
The central bank's decision is seen as a surprise one by many and comes ahead of the bank's regular meeting next month, with analysts predicting it will pave the way for further cuts.
The benchmark interest rate had been kept at 8% since last January, although in a statement released by the bank they confirmed the rate would be cut immediately.
The RBI cited a "sharper-than-expected decline" in the price of fruits and vegetables since September last year as one reason for the policy shift.
It also said "ebbing price pressures in respect of cereals and the large fall in international commodity prices, particularly crude oil" had played a part in the move.
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