The central bank cut its key repo rate by 25 basis points to 7.25%, as widely expected, after taking similar moves in January and March this year.
The repo rate is the level at which the central bank lends to commercial banks.
The cut comes despite India becoming the world's fastest-growing major economy, beating China recently.
The Indian economy grew by 7.5% in the January to March period, and 7.4% according to recent data, compared with a year ago, outstripping the 7% figure for the world's second largest economy.
China has also cut interest rates three times in the past six months.
But analysts have pointed to other Indian economic indicators which show soft patches in the economy.
Other data released on Tuesday - such as the MNI consumer sentiment indicator - fell by 2% in May from April, showing that consumers were less optimistic about the economy.
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