On top of the interest rate cut, the central bank is reducing the capital requirements for the country's banks – which, according to central bank governor Sanjay Malhotra, means a liquidity injection of 2,500 billion rupees (equivalent to 250 billion kronor) in the financial system.
The central bank justifies the measures with decreased growth and inflation that has fallen below the country's inflation target of 4 percent. And there may be more measures to come in the future depending on incoming economic statistics, according to the central bank.
The interest rate announcement weighed down the Indian rupee on the foreign exchange market.
