RBI surprises again, cuts interest rate by 25 basis points

The Reserve Bank of India (RBI) lowered its policy repo rate by 25 basis points to 7.5 percent on Wednesday, delivering its second cut this year on the back of easing inflation and a government commitment to fiscal discipline.

The RBI had lowered interest rates by 25 bps on Jan. 15. Both rate cuts this year have took place outside of the central bank's scheduled policy review meetings. Budget 2015: Complete Coverage

The rate cut marks a vote of faith in the government, which on Saturday pledged to be fiscally responsible but said it would take an additional year to meet a fiscal deficit target of 3 percent of gross domestic product.