NEW DELHI (AP) — India’s central bank on Friday cut its key interest rate to 4% to counter the blow to the economy from the Coronavirus pandemic and a lockdown meant to contain it.

Reserve Bank of India Governor Shaktikanta Das forecast that the economy will contract in fiscal 2020-21. He did not give a specific figure. The IMF earlier forecast that India’s economic growth will fall to 1.9% in this fiscal year from 4.2% in 2019 and 6.1% in 2018. Some private sector economists expect it to contract by as much as 5%.

The Reserve Bank of India had reduced the interest rate to 4.4% from 5.15% in March to ease financing woes from the pandemic. The 4% rate announced Friday is the lowest the benchmark rate, the interest the central bank charges on lending to commercial banks, has been since March 2010.

In a policy meeting, the central bank said it would allow banks a 6-month moratorium on payments of installments on loans.

Das said data point to a collapse in demand in both the cities and the countryside, with plunging investment and consumer spending.

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