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

On Friday, the Reserve Bank of India's Monetary Policy Committee (MPC) cut the repo rate by 50 basis points (bps) to 5.5%, marking the third consecutive rate cut this year.

The rate cut comes as the Indian economy slowed to a four-year low of 6.5 per cent in the fiscal year that ended March. RBI projected the economy to grow by the same measure in the current financial year that started on April 1 as rising trade tensions following US President Donald Trump's tariff policies provide headwind.