The Reserve Bank of India (RBI) has lowered its key repo rate by 25 basis points to 6.0%, marking the second rate cut this year. In a further shift, the central bank changed its monetary policy stance from “neutral” to “accommodative,” signaling its willingness to support economic growth amid rising global uncertainties.
This decision comes in the wake of mounting global trade tensions, particularly after the United States imposed hefty tariffs on various imports, including a 104% levy on Chinese goods. The RBI’s move aims to cushion the Indian economy against potential fallout from these escalating global challenges.
Reflecting this cautious outlook, the RBI also revised its GDP growth forecast for the 2025-2026 fiscal year, lowering it from 6.7% to 6.5%. The downgrade reflects concerns over the possible impact of global trade disruptions on India’s economic performance.
Indian financial markets responded with a downturn. The Nifty 50 index declined by 0.72% to 22,372.7, while the BSE Sensex fell by 0.58% to 73,791.9. Export-driven sectors such as IT and pharmaceuticals were among the hardest hit due to their exposure to international markets, especially the U.S.
Analysts expect the RBI to consider further rate cuts in the near future as it seeks to counteract the economic headwinds posed by continued global trade uncertainty.
