India’s central bank is expected to cut interest rates for a third time in five months when it meets this week, confident that inflation is stable enough to weather the summer monsoon. The Reserve Bank of India has already lowered its benchmark repo rate, the level at which it lends to commercial banks, by 50 basis points to 7.5 per cent this year. And analysts believe the RBI will snip rates again at its next meeting on Tuesday in a bid to encourage greater lending to businesses and increased consumer spending, stimulating the economy. ‘I expect the RBI to cut the rate by 25 basis points,’ Ashutosh Datar, an economist at IIFL Institutional Equities, told the AFP. Rupa Rege Nitsure, chief economist at L&T Financial Services, agreed, saying she believed the Mumbai-based bank would opt for a ‘modest’ cut. ‘Given the uncertainty concerning oil prices and the depreciation in the rupee, which have a high inflationary potential, I don’t think many people are expecting a 50-point cut,’ she told the AFP. The RBI, led by governor Raghuram Rajan, sliced 25 basis points off the repo rate in January — the first reduction in 20 months — before a surprise repeat cut in March. It kept the key rate unchanged last month, citing inflation concerns and a failure of most commercial banks to pass on lower borrowing costs to customers in Asia’s third-largest economy. But Nitsure said 20 banks were now heeding Rajan’s call to reduce their base rate and another cut would motivate others to ‘follow suit’. ‘There is a need for borrowing costs to come down because demand is so low and inflation is not a threat,’ she said. Indian prime minister Narendra Modi’s right-wing government swept to power last year pledging to reform and revive a flagging economy.