The RBI’s Monetary Policy Committee cut the repo rate by 25 basis points to 6%, aiming to support India’s business community.
Exporting sectors had been urging the government to speed up trade talks with the U.S. to avoid tariffs imposed by President Trump, which were paused for 90 days except for a 10% universal tariff.
The RBI changed its stance from "neutral" to "accommodative," hinting that further rate cuts could be possible to help businesses during economic uncertainty.
The repo rate cut will likely lead to reduced loan servicing costs for businesses, homeowners, and retail borrowers.
Despite these measures, the RBI lowered its GDP growth estimate for the current fiscal year from 6.7% to 6.5%, indicating concerns about economic slowdown.
The RBI also pointed to declining inflation and food prices but acknowledged challenges due to global uncertainties like the trade war between the U.S. and China.
The trade war, marked by retaliatory tariffs between the U.S. and China, is raising fears of an economic slowdown, similar to the impact of tariffs in the 1930s Great Depression.
Nations should focus on innovation, education, and research to grow their economies without hurting others.
COMMENTS