RBI Governor Expresses Concern Over Global Tariff Impact on Growth

Reserve Bank of India Governor Sanjay Malhotra expressed concerns about the global tariff war's impact on economic growth more than inflation. While the growth forecast was reduced by 20 basis points, inflation estimates were also adjusted in light of the ongoing trade tensions, US tariffs, and crude price changes.

Amid a mounting global tariff war, Reserve Bank of India Governor Sanjay Malhotra has voiced significant concerns, focusing more on the potential economic growth impacts rather than inflationary pressures.

Speaking to the press after announcing the first bi-monthly monetary policy, Malhotra disclosed that the RBI has trimmed its growth forecast for 2025-26 by 20 basis points, setting it at 6.5% due to prevailing uncertainties. Notably, the RBI has also revised its retail inflation estimate down to 4% for the current fiscal year.

The tariff tangle escalated after US President Donald Trump imposed reciprocal tariffs on 60 nations, including India, leading to an additional 26% duty on various Indian exports. While this move is part of a broader effort to mitigate the US trade deficit, it poses a substantial challenge for India's trade dynamics with its largest partner.