Key Highlights of the Policy Move
The Monetary Policy Committee (MPC), led by Governor Malhotra, concluded its three-day meeting on April 9, after starting deliberations on April 7. The committee’s decision was widely anticipated by economists and market experts, who had predicted a rate cut to help safeguard India's economy from external shocks.
This marks the second consecutive rate cut by the RBI. Earlier, in February 2025, the central bank reduced the repo rate by 25 basis points to 6.25%, marking its first cut since May 2020, after more than two years of unchanged rates under former Governor Shaktikanta Das.
Global Economic Pressures
The timing of the latest rate cut comes as the global economic environment faces renewed turbulence. Notably, the U.S. imposed a hefty 104% tariff on Chinese imports, while India also saw a reciprocal 26% tariff on its goods, both coming into effect on April 9. These developments have raised concerns about a potential slowdown in global trade, prompting central banks, including the RBI, to take swift action.
Economists view the rate cut as a preemptive measure to support domestic growth momentum, especially as rising global protectionism threatens exports, foreign investments, and overall economic stability.
Impact on Borrowers and Businesses
With this rate cut, borrowers can expect banks to lower interest rates on home, car, and personal loans in the coming weeks. This reduction is likely to provide relief to consumers and businesses, further stimulating domestic demand and supporting economic activity.
Governor Malhotra is expected to provide additional insights into the RBI's outlook on inflation, GDP growth, liquidity, and fiscal policy coordination in his post-policy address, offering more clarity on the central bank's approach to navigating the current global challenges.
(This story is published from a syndicated feed)