Rajan catches markets off guard with unscheduled rate cut

Raghuram Rajan

The Reserve Bank of India (RBI) took markets by surprise today as it unveiled a cut to its headline interest rate outside the usual policy meeting schedule.

The RBI cut its policy rate – the repo rate – by 25 basis points to 7.75%, and lowered the reverse repo rate and marginal standing facility rate to 6.75% and 8.75% respectively.

Governor Raghuram Rajan highlighted a number of factors that had "significantly reduced the momentum of inflation" in delivering the monetary policy statement,

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