NEW DELHI, April 9 – The Reserve Bank of India (RBI) on Wednesday cut its benchmark repo rate by 25 basis points to 6.00%, the second reduction this year, in a bid to boost lending and support domestic demand amid growing concerns over global trade tensions and sluggish economic growth.
The decision, taken unanimously by the Monetary Policy Committee (MPC), follows a 25 basis point cut in February that had brought the rate to 6.25%. With inflation currently below target and food prices falling sharply, policymakers said there was room for further easing to support the economy.
“The financial year begins on an anxious note for the global economy,” RBI Governor Sanjay Malhotra said, citing rising inflation risks stemming from global uncertainties, including recent tariff escalations by the United States under President Donald Trump.
Days before the RBI’s move, the U.S. administration imposed reciprocal tariffs on Indian exports, raising fears of a broader impact on trade and investment. “The dent on global growth due to trade frictions will impede domestic growth. Higher tariffs may have an impact on net exports,” Malhotra warned.
Despite these risks, the governor said India remains engaged in active trade discussions with the U.S. and expressed confidence in the central bank’s ability to manage domestic growth. Malhotra noted positive signs in the economy, pointing to resilience in the services sector, a revival in manufacturing activity, and improved consumer spending in urban areas. “The balance sheets of banks and corporates are healthy,” he added.
The rate cut is expected to lower borrowing costs for banks and enable cheaper loans for consumers, potentially easing the burden of monthly installments (EMIs) for home and personal loans. The central bank also revised down its GDP growth projection for the current fiscal year by 20 basis points, now estimating real GDP growth at 6.5%.
The repo rate — or repurchase rate — is the rate at which the RBI lends short-term funds to commercial banks. Lower rates are generally aimed at stimulating credit and investment. With the RBI maintaining an accommodative stance, analysts will now look to future inflation data and geopolitical developments for signs of further monetary easing.
