It has also cut the reverse repo rate (rate at which the RBI borrows from the banks) by 50 basis points from 4.0 per cent to 3.5 per cent with immediate effect.
The fresh monetary stimulus would slash the rates at which it lends and borrows short term funds from banks by half a per cent.
The revision comes more than a month after RBI's quarterly review of the monetary policy. On Jan 27, when contrary to industry expectations, no cut in key rates were announced.
Both repo and reverse repo rates saw a 100 basis points reduction on Jan 2. The RBI stated that since the release of the RBI"s third quarter review on Jan 27, 2009, the global financial and economic conditions have further deteriorated as revealed by the latest available information.