Reserve Bank Of India Surprises With Early Rate Cut

MUMBAI - The Reserve Bank of India cut interest rates on Thursday by 25 basis points to 7.75 percent in a surprise inter-meeting cut, yielding to growing signs of slowing inflation and a flagging recovery.

The wholesale price index for December, released on Wednesday, rose just 0.11 percent year-on-year compared with a 0.6 percent jump forecast by economists in a Reuters poll. Wholesale prices were unchanged in November.

In a statement, the RBI cited lower-than-expected inflation, weak crude prices and weak demand, as well as the government's commitment to sticking to a fiscal deficit target.

"These developments have provided headroom for a shift in the monetary policy stance," it said.