Mumbai April 9 2025: RBI, India’s central bank, cut rates by 25 basis points to 6.0% in today’s monetary policy meeting.
This marks the second consecutive cut under Governor Malhotra, who took office earlier this year. The move comes at a time when the Indian economy faces multiple external and domestic pressures, including the implementation of a 26% tariff by the United States on Indian exports.
RBI cut inflation forecast to 4% and GDP growth to 6.5% for FY26.
India’s economy is estimated to have grown by 6.5% in the last fiscal year—its slowest pace since the pandemic. The US tariffs are expected to shave off 20 to 40 basis points from India’s projected growth, according to analysts. As a result, several institutions, including Goldman Sachs, have trimmed their 2025 GDP forecast for India from 6.3% to 6.1%, well below the RBI’s estimate of 6.7%
In its current assessment, the central bank cited softer-than-expected inflation and easing oil prices as reasons to continue with its supportive stance. “As the RBI MPC is faced with inflation and growth outcomes that are below their estimated trajectory, it opens policy space to deliver a second successive policy repo rate cut,” Bloomberg quoted Aastha Gudwani, an economist at Barclays Plc, as saying.
