- Uncertainties cloud the economic outlook across regions due to the latest trade-related measures, says RBI Governor Sanjay Malhotra
NE BUSINESS BUREAU
MUMBAI, APR 9
The 54th monetary policy committee (MPC) deliberations concluded on Wednesday with the Reserve Bank of India (RBI) announcing yet another rate cut. RBI Governor Sanjay Malhotra announced that the MPC decided to cut the policy rate by 25 basis points to 6 per cent, making it the second rate reduction in 2025.
However, the RBI Governor also announced that the apex bank cut India’s GDP growth projection for FY2026 to 6.5 per cent from the earlier estimate of 6.7 per cent.
Moreover, the rate-setting committee of the RBI decided to change its policy stance to ‘accommodative’ from ‘neutral’, said Malhotra, who chaired his second MPC meeting.
Noting the latest disruptive developments on the global stage, the RBI Governor assured that the central bank “is on alert”. Uncertainties cloud the economic outlook across regions due to the latest trade-related measures, added Malhotra.
The 25bps rate cut follows the February cut, when the RBI returned from a hiatus of almost five years—that, too, at a time when fears of global trade war triggered by Donald Trump-induced tariffs grip markets world over.
In its last policy in February, RBI had trimmed the repo rate by 25 basis points to 6.25 per cent. This rate came after a previous rate reduction in May 2020. The last revision of rates happened in February 2023 when the policy rate was hiked by 25 basis points to 6.5 per cent.
The RBI has lowered the GDP growth forecast to 6.5 per cent from earlier projection of 6.7 per cent due to global uncertainties. Last week, US President Donald Trump announced a hefty 26 per cent reciprocal tariffs on Indian imports, effective April 9.
Last week, US President Donald Trump slapped a 26 per cent reciprocal tariff on India, which led to Citi and Goldman Sachs cutting the country’s growth outlook. This contrasted the earlier RBI economic growth forecast of 6.7 per cent for fiscal 2025-2026, leading to a further cut in GDP projections to 6.5 per cent announced on Wednesday.
Following the three-day MPC discussions, Malhotra stated that the RBI presented the policy rate guidance without liquidity management guidance.
