NEW DELHI: Monthly instalments on auto, home and consumer durable loans may finally come down, as the apex bank in a surprise move cut key lending rates.

The unscheduled rate cut served led Indian Inc. to cheer the move and stock markets to rally.

The industry which is reeling under an economic slowdown coupled with high fuel and interest rate costs said that it expect more such moves in the coming month to kick-start the investments and buying cycle.

The much awaited reduction in lending rates also fulfilled Reserve Bank of India (RBI) Raghuram Rajan's promise of an 'out-of-turn' rate cut as and when inflation eases.

Move which came as a surprise broke away from the standard RBI practice of announcing the lending rates every two months in a financial year.

The announcement, though anticipated, was expected to be made at the next monetary policy review meeting scheduled for Feb 3. Now, the industry is clamouring for more rate cut in the Feb 3 meeting.

The move was triggered by recent inflation data that met apex bank's target of a below eight percent retail inflation by January 2015, led it to reduce the repo rate or the rate at which RBI lends to commercial banks by 25 basis points.

In a statement, Rajan said: "In its public interactions, the RBI had committed to initiate the process of monetary easing as soon as data indicated that medium term inflationary targets would be met."

According to him, lower than expected inflation has been enabled by the sharper than expected decline in prices of vegetables and fruits since September, ebbing price pressures in respect of cereals, and the large fall in international commodity prices, particularly crude oil.

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