MUMBAI, Feb. 8 -- India's central bank unexpectedly cut interest rates on Thursday, along with an anticipated change in its policy stance to neutral, citing easing inflation and the need to sustain growth in the world's fastest growing major economy.

The Reserve Bank of India's (RBI) monetary policy committee (MPC) cut repo rate by 25 basis points to 6.25%. Only eight of the 38 economists surveyed by Bloomberg expected the central bank to effect a rate cut. Banks, however, remained ambiguous about passing on the benefit to borrowers.

The rate cut, the first such move by RBI since August 2017, comes as the central bank trimmed its retail inflation forecast for the first half of the next fiscal and marginally lowered its economic growth e...