Reserve Bank of India cuts repo rate by 25 basis points, hints at more in June
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on 9th April 2025 has voted unanimously to reduce the policy rate (repo rate) by 25 basis points (bps) to 6% with immediate effect. This is second time in a row that the MPC has cut rates by 0.25%. RBI Governor Sanjay Malhotra said the drop in repo rates is a counter to the current global volatility resulting primarily from US reciprocal tariffs that were announced earlier in April. He said the RBI stance was ‘accommodative’ to lower EMIs for people and even companies. Malhotra also hinted that at the next policy meeting scheduled on June 6, 2025 the RBI may consider another cut based on the situation then. Malhotra admitted that it was difficult to assess and quantify the adverse impact on India or globally of the financial uncertainty since the US tariff action. He also said that quote “On the upside uncertainties may lead to possible currency pressures and imported inflation. On downside, slowdown in global growth could entail further softening in commodity a crude oil prices, putting downward pressure on inflation.” He admitted that while global trade and policy uncertainties shall impede growth, its impact on domestic inflation, will require RBI to be vigilant. But he added this was not expected to be of high concern. Taking various factors into consideration, the real GDP growth is now projected at 6.5%, with Q1 at 6.5%; Q2 at 6.7%; Q3 at 6.6%; and Q4 at 6.3%.
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on 9th April 2025 has voted unanimously to reduce the policy rate (repo rate) by 25 basis points (bps) to 6% with immediate effect. This is second time in a row that the MPC has cut rates by 0.25%. RBI Governor Sanjay Malhotra said the drop in repo rates is a counter to the current global volatility resulting primarily from US reciprocal tariffs that were announced earlier in April. He said the RBI stance was ‘accommodative’ to lower EMIs for people and even companies. Malhotra also hinted that at the next policy meeting scheduled on June 6, 2025 the RBI may consider another cut based on the situation then. Malhotra admitted that it was difficult to assess and quantify the adverse impact on India or globally of the financial uncertainty since the US tariff action. He also said that quote “On the upside uncertainties may lead to possible currency pressures and imported inflation. On downside, slowdown in global growth could entail further softening in commodity a crude oil prices, putting downward pressure on inflation.” He admitted that while global trade and policy uncertainties shall impede growth, its impact on domestic inflation, will require RBI to be vigilant. But he added this was not expected to be of high concern. Taking various factors into consideration, the real GDP growth is now projected at 6.5%, with Q1 at 6.5%; Q2 at 6.7%; Q3 at 6.6%; and Q4 at 6.3%.
