The Reserve Bank of India (RBI) has cut its key repo rate for the second time in a row, reducing it by 25 basis points to 6 percent. This decision, made on Wednesday, April 9, comes as part of the central bank’s ongoing efforts to support the economy, which is facing challenges from global trade tensions, particularly the fresh tariffs imposed by the United States.
India’s Monetary Policy Committee (MPC), which comprises three RBI members and three external experts, had already reduced the repo rate by 25 basis points in February.
The central bank also shifted its policy stance from “neutral” to “accommodative,” signaling the possibility of further rate cuts in the future.
The MPC’s unanimous decision to cut rates and adopt a more accommodative stance highlights the RBI’s move to support economic growth.
RBI Governor Sanjay Malhotra acknowledged the difficulties posed by the US tariffs, including a 26 percent tariff on Indian imports.
Post Monetary Policy Press Conference by Shri Sanjay Malhotra, RBI Governor- April 09, 2025 at 12 noon. https://t.co/qDc97ztxy1
— ReserveBankOfIndia (@RBI) April 9, 2025
The RBI revised its growth forecast for the fiscal year 2024-25 to 6.5 percent, down from its earlier projection of 6.7 percent. At the same time, the inflation forecast was lowered to 4 percent from 4.2 percent, which remains within the RBI’s target range.
The decision to cut rates comes amidst concerns about the weakening Indian rupee. The rupee has already fallen by 1.2 percent since the US tariffs were announced.
The same trend is visible in other major Asian currencies.
While some economists expect the RBI’s growth estimates to be on the optimistic side, with growth likely to be around 6.3 percent for the fiscal year 2026, others predict that the central bank may reduce the repo rate further, with a possible target of 5.50 percent by the end of the year.
