RBI Reduces Rates to Counter Economic Pressures Amid Global Trade Uncertainties

The Reserve Bank of India has cut interest rates for the second time to support the economy amidst US tariffs and global uncertainties. This move by the Monetary Policy Committee aims to lower borrowing costs and stimulate growth, despite challenges posed by trade tensions and fluctuating global markets.

On Wednesday, the Reserve Bank of India (RBI) announced a second consecutive interest rate cut, underscoring efforts to support the economy amidst pressures from stringent US tariffs. The decision, taken by the Monetary Policy Committee (MPC), reflects a strategic shift towards bolstering economic growth in a challenging global trade environment.

In a unanimous decision, the MPC slashed the repo rate by 25 basis points, bringing it down to 6 percent, marking the lowest borrowing costs since November 2022. RBI Governor Sanjay Malhotra signaled possible further easing, shifting the policy stance from 'neutral' to 'accommodative', as the bank addresses the evolving challenges posed by tariffs and global economic uncertainties.

The central bank also adjusted its economic growth estimate to 6.5 percent for the 2025-26 fiscal year, down from 6.7 percent, and revised its inflation projection to 4 percent. Economists anticipate more rate cuts influenced by global dynamics. With trade tensions artfully clouding growth prospects, the RBI emphasizes maintaining stability while seeking non-inflationary growth.