RBI Cuts Repo Rate By 25 BPS, Lowers Growth Forecast Amid Trump Tariffs

RBI Repo Rate Cut: The Reserve Bank of India (RBI) has announced a 25 basis points cut in the short-term lending rate (repo rate), bringing it down to 6.00%. This decision was revealed on Wednesday as RBI Governor Sanjay Malhotra presented the first bi-monthly monetary policy of the current financial year.

Apart from this, the RBI now expects the economy to grow by 6.5% in Q1, 6.7% in Q2, 6.6% in Q3, and 6.3% in Q4 of fiscal year 2026. These are slightly lower than its earlier estimates of 6.7% for Q1, 7% for Q2, 6.5% for Q3, and 6.5% for Q4.

The rate cut comes amid expectations from economists and market experts, who predicted a reduction in response to moderating inflation and rising concerns over global economic uncertainty. The RBI's Monetary Policy Committee (MPC), headed by Governor Malhotra, began its three-day meeting on Monday before finalizing the decision.

Second Rate Cut

This marks the second consecutive rate cut by the central bank. In February, the MPC slashed the repo rate by 25 basis points to 6.25%, the first such move since May 2020 and after a gap of nearly two-and-a-half years.

Experts believe this rate cut is a timely step to support economic growth, especially as the global environment faces new headwinds—most notably, the recently imposed 104% tariffs by the U.S. on Chinese goods.

The heightened trade tensions are seen as a threat to global trade and investment flows, and the RBI’s move is aimed at keeping the Indian economy on a stable path. US President Donald Trump has announced a hefty 26 per cent reciprocal tariff rate on India, effective April 9.

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What Is MPC Meet

The Reserve Bank of India (RBI) holds six bi-monthly monetary policy meetings every financial year to review the country's key economic indicators such as interest rates, money supply, and inflation outlook. So far, one meeting has been conducted this year, and the remaining five are scheduled for June 4–6, August 5–7, September 29–October 1, December 3–5, and February 4–6.

The repo rate is the interest rate at which the RBI lends short-term funds to commercial banks, and a cut in this rate generally helps lower borrowing costs across the economy. With global uncertainties and inflation being closely monitored, the upcoming policy meetings will be crucial in determining the RBI’s next steps.