Can RBI Shield Economy From Tariff Impact By Slashing Interest Rates?

The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) is set to announce its policy decision on April 9, 2025. Market participants widely anticipate a 25-basis-point reduction in the repo rate, which would bring it down to 6%. This expectation is bolstered by the recent moderation in inflation and the need to support economic growth amid escalating global trade tensions. In its previous meeting in February 2025, the RBI implemented a 25-basis-point cut, marking the first reduction in nearly five years. This move was aimed at stimulating growth as inflation showed signs of easing. The RBI's forthcoming policy decision is poised to address the dual objectives of maintaining inflation within target levels and supporting economic growth amid external challenges. The anticipated rate cut reflects a strategic response to both domestic economic indicators and the evolving global trade landscape.