MUMBAI (Reuters) - The Reserve Bank of India (RBI) cut its key repo rate by a larger-than-expected 50 basis points on Friday, a third consecutive reduction, as muted inflation provided space for policymakers to focus on supporting economic growth.

India's central bank has lowered interest rates by a deeper-than-expected half a percent - the third cut in a row amid falling inflation and lower growth in Asia's third largest economy. It also increased the amount of liquidity - or supply of money - available in the system.

India retained its FY2025-26 GDP growth forecast at 6.5% amid global uncertainty. The RBI cut interest rates to 5.50% to spur growth. Despite Q4 GDP rising 7.4%, FY25 saw the slowest growth since COVID.