RBI MPC Meeting Highlights: RBI governor Sanjay Malhotra announces 25 bps repo rate cut as Trump's tariffs add to uncertainties; GDP growth outlook cut to 6.5%

Santosh Agarwal, CEO, Paisabazaar says depositors having investible surpluses can consider booking FDs offering higher yields, especially those offered for longer tenures. This will allow them to earn higher FD yields even during the falling interest rate regime. Consumers seeking higher FD yields can consider small finance banks and private sector banks, which are still offering FD yields of 8% and above.

With inflation forecast for FY26 at 4% the focus of RBI has completely shifted on the GDP growth as numbers got revised downwards to 6.5% from earlier 6.7%. RBI not only reduced interest rates by 25 bps but also changed its stance to accommodative from neutral. Inflation to remain under control as forecast of normal monsoon, record production of wheat and higher production of key pulses will ensure durable softening of food inflation. Also fall in crude oil price will keep inflation under check.

If inflation remains under/around 4% for FY26 then the real rate at 200 bps is on the higher side and mostly will be reduced by cutting interest rates further. However RBI would want to keep its arsenal intact if there is any disruption in the world order due to a tariff war. We believe RBI will watchfully go for couple of more cuts in little over as many policy meets. 10 year bond yield may not show immediate correction but this policy has defined the near-term ceiling for it, says Siddarth Bhamre, Head of Research at Asit C Mehta Investment Interrmediates.

The Reserve Bank of India announced a 25-basis point rate cut, bringing the repo rate down to 6% from 6.25% which is in line with market expectations. The policy stance has shifted from neutral to accommodative indicating the possibility of further rate hikes. The RBI assured that liquidity will be infused as required, offering comfort to the markets. Forward projections may remain optimistic, with inflation expected to stay around 4% and GDP (Gross Domestic Product) growth projected at 6.5%. Given the benign inflation outlook, the RBI is likely to focus on growth through monetary stimulus measures. Overall, the policy is viewed as positive for fixed income markets, says Marzban Irani, CIO of Fixed Income at LIC Mutual Fund.

RBI reduced the policy repo rate by 25 basis points and shifted its monetary policy stance from neutral to accommodative, signalling a clear intent to support growth recovery. While the central bank offered no explicit guidance on liquidity, it acknowledged that systemic liquidity has swung into surplus—thanks to active RBI management—from a previously persistent deficit. Nevertheless, the RBI reiterated its commitment to maintaining adequate financial security.

The impact of ongoing global trade tensions and tariff wars on India’s growth and inflation remains complex and hard to quantify, but the central bank flagged them as posing clear downside risks. That said, both consumption and investment demand are showing early signs of recovery, and financial conditions have turned increasingly supportive.

Despite these positive signals, the RBI has retained its real GDP growth projection for FY2025-26 at 6.5%, which is 20 basis points lower than its previous estimate. We believe this reflects a conservative stance; in our view, real GDP growth is likely to trend closer to 7%, aided by improving domestic demand, easing financial conditions, and strong corporate earnings momentum.

On the inflation front, risks have receded considerably. A durable softening in food prices, a sharp correction in inflation expectations, and a notable decline in crude oil prices have led the RBI to revise its inflation projection for FY2025-26 to 4.0%, down from 4.2%. We expect the actual outturn to be even lower, assuming global commodity markets remain benign.

Given this backdrop, we anticipate an additional 25–50 basis points of rate cuts over the course of 2025.

In terms of regulatory actions, the RBI announced several measures to enhance credit flows and improve financial resilience:

Steps to strengthen loan recovery mechanisms.

Standardisation of prudential norms across lenders for gold loans.

Expansion of co-lending frameworks to improve credit outreach.

Broadened funding avenues for infrastructure finance.

Liberalisation of UPI transaction limits beyond peer-to-peer transfers.

While largely in line with market expectations, the policy demonstrates a cautious but supportive posture on both growth and inflation. The overall tone is market-friendly and should be viewed as positive for both equity and debt markets. Financials and infrastructure-related sectors stand to benefit the most, says Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Group.

“The Monetary Policy Committee's (MPC) decision to reduce the policy rate by 25 basis points, from 6.25% to 6%, was largely in line with market expectations. The RBI lowered the growth forecast to 6.50% and inflation to 4.00% for FY2026. The RBI importantly changed the stance on monetary policy to ‘accommodative’, taking comfort from continued disinflation from food, oil and commodities, lending continuity to monetary policy actions from the RBI. Considering the benign inflation outlook, the interest rates even after today’s cut are in neutral territory. The rate cut could be conducive to the growth dynamics with RBI’s intent of ensuring credit flow to the productive sectors in the economy. The RBI action is consistent with the Government of India’s efforts and emphasis to support growth. We feel the RBI has done a fine balancing act of managing growth inflation dynamics in the current economic environment loaded with global uncertainties,” says Rahul Goswami, CIO & MD, India Fixed Income, Franklin Templeton.

RBI’s MPC announcement to reduce the policy repo rate by 25bps to 6% and adoption of accommodating stance will provide a cushion to Indian economy from adverse effects of global economic uncertainty, while at the same time boost economic growth, said Hemant Jain, President, PHDCCI.

Government’s relaxation in income taxes announced during Budget 2025-26 along with reduction in interest rates will improve consumer sentiment which will accelerate GDP growth via uptick in private final consumption expenditure, he said.

On the industry front, reduction of policy rates will lower debt servicing costs providing extra cushion to the industry to absorb the external shocks such as the US tariff announcements recently, added Jain.
 
At the same time, softened interest rates will kick start private CAPEX, said Jain.

Buoyed by a strong seasonal correction in vegetable prices, assumption of normal monsoon and substantial reduction in global crude oil prices, we expect inflation to remain within RBI target range in the coming quarters, he said.

"The RBI’s decision to reduce the repo rate by 25 basis points to 6% comes as a welcome and timely move for the Indian economy. At a time when global headwinds and tariff concerns loom large, the accommodative stance by the MPC will serve as a much-needed catalyst to revive consumption and investment cycles. For the real estate sector, this signals increased affordability for homebuyers and improved liquidity conditions for developers. It will directly impact housing demand, particularly in the affordable and mid-income segments, and will boost sentiments in the real estate sector. This policy stance will further encourage transparency and trust, essential for sustainable sectoral growth, says Prashant Sharma, President, NAREDCO Maharashtra.

1. As expected by market participants, Reserve Bank of India (RBI) cut Repo rate by 25 bps, bringing the Repo rate to 6.00%, Standing Deposit Facility (SDF) at 5.75% and Marginal Standing Facility (MSF) at 6.25%, says Killol Pandya, Senior Fund Manager – Debt, JM Financial Asset Management Ltd.
2. The Monetary Policy Committee (MPC) also changed its stance to ‘Accommodative’ (from ‘Neutral’).
3. The principal driver for the rate cut and change in stance were RBI's expectations of a benign inflation trajectory and the need to support moderating economic growth.
4. RBI lowered its Gross Domestic Production (GDP) projection for FY 25-26 to 6.50% (Vs 6.70% earlier). RBI also lowered its FY25-26 Consumer Price Index (CPI) inflation forecast to 4.00% (Vs its earlier forecast of 4.20%)
5. RBI expressed its view of a moderating growth and softening of inflation of the coming months, which bodes well for bond markets. However, it also reiterated the need for vigilance at this juncture, given the risks posed by the rising uncertainties regarding global macro-economic conditions and its potential impact on domestic conditions.
6. As opposed to expectations of some market participants, RBI did not give any express guidance on market liquidity, but noted the present positive systemic liquidity conditions and reiterated its commitment to proactively, says Killol Pandya.

"The Reserve Bank of India, in its monetary policy meeting held on April 9, 2025, announced a series of proactive steps aimed at supporting economic growth amid mounting global uncertainties and subdued inflation. The Monetary Policy Committee (MPC) unanimously decided to reduce the repo rate by 25 basis points, lowering it from 6.25% to 6.00%. Alongside the rate cut, the policy stance was shifted from neutral to accommodative, signaling the central bank’s readiness to ease further if required. This shift narrows future options to either maintaining the current rate or implementing additional cuts, depending on evolving economic conditions.

In addition to the repo rate, other key policy rates were also revised. The standing deposit facility (SDF) rate was lowered to 5.75%, while both the marginal standing facility (MSF) and the bank rate were set at 6.25%. The RBI also revised its macroeconomic outlook—bringing down the inflation forecast for FY26 to 4%, and trimming the GDP growth projection from 6.7% to 6.5%, reflecting the challenges posed by the global economic environment.

This decision comes on the back of a sustained moderation in retail inflation. In February 2025, the Consumer Price Index (CPI) fell to 3.61%, well within the central bank’s target band of 4% ± 2%. The drop in inflation has created the necessary space for monetary easing, with the latest rate cut expected to reduce borrowing costs for both households and businesses, thereby aiding credit growth and demand revival.

Overall, the RBI’s latest policy measures are aimed at preserving long-term macroeconomic stability while addressing near-term risks. By enhancing liquidity and reducing interest rates, the central bank seeks to support domestic momentum, counterbalance external shocks such as global trade disruptions and U.S. tariff actions, and create a more conducive environment for sustainable economic growth, says Ajit Mishra – SVP, Research, Religare Broking Ltd.

“We welcome the RBI’s 25 basis point repo rate cut as a timely move to support growth amid global and domestic headwinds. With inflation within target and GDP showing softness, the cut aims to boost investment and consumption without fueling price pressures. We hope that the benefits of this rate cut will be passed to the consumers on an immediate basis, which will be crucial to boost consumption.

The downward revision in growth reflects caution over global trade tensions, though optimism remains for domestic recovery. A drop in crude prices and a stronger rupee have eased inflation, leading to a revised target of 4%. With a cumulative 50 basis point cut in 2025, it is now vital for commercial banks to transmit the benefit to consumers. Lower borrowing costs can aid housing affordability, developer funding, and infrastructure growth,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.

"The government has done its bit. I think, in the budget that you saw recently, a large number of measures, whether you know it is in terms of the increased capex, whether it is in terms of the tax rebates on the personal income tax side.

And we have reduced repo rates. We have changed the stance going forward, which means that the direction of the policy repo rate is downwards, where it will reach we really don't know. I’m Sanjay, but I'm not Sanjay of Mahabharata, to be able to, forsee that far. I do not have that divine vision that he had," said RBI governor Sanjay Malhotra.

The RBI’s 0.25% repo rate cut is a stabilising and much-needed move at a time when global economic turmoil poses challenges. By ensuring liquidity and keeping borrowing costs attractive, this decision by the central bank, will bolster corporate confidence and investments. For India's housing sector, if the rate cut is passed on as a benefit on home loans, it will support the demand momentum, and help the real estate industry ride over this period of uncertainty, said Amit Goyal, MD, India Sotheby’s International Realty.

We will provide sufficient liquidity to the system so that this transmission of the policy rate into the interest rate happens quickly, said RBI governor Sanjay Malhotra.

With these strategic policy moves, the RBI aims to cushion the impact of global economic volatility while addressing domestic slowdown concerns. The combination of rate cuts, a supportive policy stance, and forward-looking regulations is intended to bolster financial stability, catalyze credit flow, and pave the way for stronger and more resilient economic growth, says Bajaj Broking Research.

Globally, you are aware that most of the forecasts now have come down by 20 to 30 basis points, not only for this year, even for next year, said RBI governor Sanjay Malhotra.

“The monetary policy met expectations with a 25 basis points (bps) rate cut. With downside risks to growth greater compared with the February policy and inflationary pressure weaker due to falling crude prices, a rate cut was a forgone conclusion.

The shift in stance supports the durability of the rate reduction cycle, and we anticipate at least two more rate cuts of 25 bps each within the fiscal year.

The forecast of normal monsoon could bring happy tidings for agriculture and food inflation, though heat wave and other weather-related disruptions will bear watching amid rising disruptions from climate change.

The global environment, meanwhile, has become more uncertain due to significant tariff increases by the US and retaliatory measures from some economies.

Consequently, the downside risks to growth in major economies are now considered a base case scenario.

RBI, too, has cut its growth forecast to 6.5% due to rising uncertainty and downside risks from tariff-related developments.

Given the numerous moving parts, forecasts are now less reliable. Nonetheless, in our base case, we project India to grow at 6.5% with risks tilted to the downside and inflation rate of 4.3% in fiscal 2026. The downside risks to growth come from rising uncertainty, which impairs decision making, and the impact of tariffs and slowing global growth on exports, says Dharmakirti Joshi, Chief Economist at Crisil.

“RBI cut repo rate by 25 basis points as widely expected. RBI changed its stance to accommodative from neutral, which was not on expected lines given the global background. RBI seems to be comfortable with currency depreciation in the coming months. RBI has reduced its GDP growth forecast to 6.5 from 6.7 percent and CPI inflation has been revised to 4 from 4.2 percent. They highlighted future expectation of CPI over a 3 and 6 month time frame is lower. The governor highlighted lower commodity prices specially oil prices due to tariff war and on the growth downside due to lower investments by companies. RBI made it clear they will provide liquidity in the banking system to support growth Rate cuts in India is expected to be deeper to support growth as CPI inflation is below target of 4 percent for most of the year as per RBI projections. The terminal rate on repo can go towards 5.25 levels from 6 percent at present. The ten-year yields can move towards 6 to 6.25 percent in the coming years as globally growth slows down.

Investors may consider investing in duration products to take advantage of fall in yields in the coming months. Gilt fund, corporate bonds and short-term bond fund may be part of core portfolio to take advantage of fall in yields. For accruals, investors may look to invest in money market and ultra short-term bond fund,” said Murthy Nagarajan, Head-Fixed Income, Tata Asset Management.

“The RBI has delivered what the market expected – a 25-bps cut and a change in stance to “accommodative”. It was also explained that being “accommodative” means that there would be no chance of a rate hike at this point, even as the RBI stays vigilant with the evolving macro scenario of tariff wars and geopolitical risks. Both inflation and growth forecasts were lowered by 20 bps. There were no fresh liquidity measures that were announced in this policy. The space for policy rate cuts were predicated by a decisive change in the inflation outlook, led by food prices and more specifically vegetable prices.

Given projections by the Skymet of a normal monsoon, the risks to food inflation is likely reduced. At the other end of the spectrum, global growth risks have unleashed a sharp softening in crude oil and other commodity prices, and this is also a positive for India’s inflation dynamics. Overall, the confidence that inflation would remain aligned to the 4% target has magnified. Given a 4% inflation target, the scope of pushing repo rate down to 5.50% in this cycle has opened. Consequently, we expect the RBI to cut in June and also in August, said Indranil Pan, Chief Economist at YES Bank.

“RBI’s Monetary Policy outcome was inline with consensus estimates and a 25 bps rate cut should augur well both for the financial system and the economy. Given the ongoing tariff war across the world, an accommodative stance along with a stable inflationary scenario would ensure buoyant credit growth and support our domestic environment. The rate cut is indeed positive for our bond markets but the ongoing pressure on the US bond yield restricts the full extent of the impact in India,” says Umeshkumar Mehta, CIO, SAMCO Mutual Fund.

“RBI’s decision to cut the repo rate by 25-basis points to 6.25% is a well-timed and much-needed move. With CPI inflation easing and Q2-FY25 GDP growth slowing, this was an opportune moment for the RBI to initiate rate cuts. This move is going to help revive growth in consumption, and it will also help reduce borrowing cost for the interest rate-sensitive housing sector, particularly in the affordable and mid-income category homes. The recent measures in the Union Budget along with the RBI policy decision has offered a much needed stimulus for sustained growth in the residential market,” says Anshul Jain, Chief Executive, India, SEA & APAC Tenant Representation, Cushman & Wakefield.

The Donald Trump administration has announced a 26% reciprocal tariff on Indian goods, and while other major economies have been hit with higher rates, a trade war may mean a bigger global economic slowdown and even recession. It is against this backdrop that the RBI’s monetary policy assumes significance.

The Indian economy has made steady progress towards the goals of price stability and sustained growth. On the inflation front, while the sharper-than-expected decline in food inflation has given us comfort and confidence, we remain vigilant to the possible risks from global uncertainties and weather disturbances. Growth is improving after a weak performance in the first half of the financial year 2024-25, although it still remains lower than what we aspire for, said RBI governor Sanjay Malhotra.

The outlook for food inflation has turned decisively positive. There has been a substantial and broad-based seasonal correction in vegetable prices, said RBI governor Sanjay Malhotra.

"The global economic outlook is fast changing. The recent trade tariff related measures have exacerbated uncertainties clouding the economic outlook across regions, posing new headwinds for global growth and inflation. Financial markets have responded through sharp fall in dollar index and equity sell-offs with significant softening in bond yields and crude oil prices," said RBI governor Sanjay Malhotra.

“After assessing the current and evolving macroeconomic situation, the MPC unanimously voted to reduce the policy repo rate by 25 basis points to 6.00 per cent with immediate effect. Consequently, the standing deposit facility (SDF) rate under the liquidity adjustment facility (LAF) shall stand adjusted to 5.75 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 6.25 per cent. This decision is in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth,” said RBI governor Sanjay Malhotra.

“Undertaking a second successive step to ease policy, the Monetary Policy Committee voted unanimously in favour of a 25bp rate cut. In line with our view, the stance was revised to ‘accommodative’, reflecting policymakers’ comfort with the evolving inflation trajectory and providing room to support growth. This was reinforced by the modest downward revision in growth projections.

Recent liquidity management measures have underscored the preference to maintain a surplus balance, thereby keeping the banking system well-oiled and aiding policy transmission. Overall, policy guidance remained dovish, while keeping an eye on global uncertainties and the consequent need to maintain stability in domestic financial markets. We expect a further 50bp of cuts this year, says Radhika Rao, Executive Director and Senior Economist at DBS Bank.

“We welcome the RBI’s decision to reduce the repo rate by 25 basis points to 6.00%. At a time of global economic volatility caused by increasing tariffs and geopolitical tensions , this move reflects a continued shift toward a pro-growth stance amid easing inflation and a stabilizing macroeconomic outlook. With CPI inflation expected to moderate to 4.5%, the rate cut is well-timed to uplift consumer sentiment and enhance borrowing capacity—especially in the housing sector. It is likely to improve home loan affordability, stimulate housing demand, and provide a strong impetus to the mid-income and affordable segments, where interest rate sensitivity remains high. The RBI’s continued policy easing highlights its commitment to sustaining growth while safeguarding macroeconomic stability,” said Boman Irani, President, CREDAI National.

“The global economy is going through a period of exceptional uncertainties. The difficulty to extract signal from a noisy and uncertain environment poses challenges for policy making. Nevertheless, monetary policy can play a vital anchoring role in ensuring that the economy remains on an even keel in our context. As I mentioned earlier, the domestic growth inflation trajectory demands monetary policy to be growth supportive, while being watchful on the inflation front

We are aiming for a non-inflationary growth that is built on the foundations of an improved demand and supply response and sustained macroeconomic balance. As before, we shall remain agile and decisive in our response and put in place policies that are clear, consistent, credible and in the best interest of the economy, said RBI governor Sanjay Malhotra.

Loans against the collateral of gold jewellery and ornaments, commonly known as gold loans, are extended by regulated entities, both banks and NBFCs, for both consumption and income generation purposes. In order to harmonize guidelines across various types of regulated entities to the extent possible, keeping in view their differential risk bearing capabilities, we shall issue comprehensive regulations on traditional norms as well as conduct related aspects for such loans, RBI governor Sanjay Malhotra said

The headline inflation moderated during January, February 2025, following a sharp correction in food inflation, the outlook for food inflation has turned decisively positive. The uncertainties regarding Rabi crops have abated considerably and the second advance estimates point to a record wheat production and higher production of key pulses over that last year, along with robust reef arrivals, this is expected to set the stage for a durable softening of food prices, sharp decline in inflation expectations in our latest survey for three months and one year ahead would also help anchor inflation expectations going forward, said RBI governor Sanjay Malhotra.

Furthermore, the fall in crude oil prices augurs well for the inflation outlook concerns on lingering global market uncertainties and recurrence of adverse weather related supply disruptions, however, pose upside risks to the inflation trajectory.

“However, I may add that as per the latest forecast by various organizations national and international, including our own Indian Meteorological Department, the monsoon is expected to be normal, and the El Nino effect is also expected to be absent,” he said.

So these are positives for us, taking all these factors into consideration, and therefore assuming a normal monsoon, CPI inflation for the financial year, 2025-26 this year is projected at 4% with Q1 at 3.6%, Q2 at 3.9%, Q3 at 3.8%, and Q4 slightly higher at 4.4%. The risks are evenly balanced.

India's services exports remained resilient in January, February of this year, driven by software, business and Transportation Services, going forward. Net services and remittances receipts are expected to remain in large surplus, partly offsetting the trade deficit. The current account deficit for last year as well as this year, 2025-26 are expected to remain well within the sustainable level, said RBI governor Sanjay Malhotra.

RBI governor Sanjay Malhotra said the the CPI inflation for the financial year 2025-26 is projected at 4%. This is well within the RBI's comfort band of 2-6%.

“While the risks are evenly balanced around these baseline projections, uncertainties remain high in the wake of recent spike in global volatility. The current year has been marked down by 20 basis points relative to our earlier assessment of 6.7%,” RBI governor Sanjay Malhotra announced.

In 2025-26 the current year, prospects of agriculture sector remain bright on the back of healthy reservoir levels and robust crop production, manufacturing activity is showing signs of revival, with business expectations remaining robust, while services sector activity continues to be resilient.

On the demand side, bright prospects of the agriculture sector board well for rural demand, which continues to be healthy, while urban consumption is gradually picking up with an uptick in discretionary spending, investment activity has gained traction and is expected.

To improve further on the back of sustained higher capacity utilization, government's continued thrust on infrastructure spending, healthy balance sheets of banks as well as the corporates, along with the easing of financial conditions.

Merchandise exports will be weighed down by global uncertainties, as mentioned earlier, while services exports are expected to remain resilient, headwinds from global trade disruptions continue to pose downward risks.

Taking all these factors into consideration, real GDP is now projected for this fiscal at 6.5% for FY 2025-26.

RBI governor Sanjay Malhotra said that India's economy is expected to grow at 6.5% in FY 2025-26

Q1: 6.5%
Q2: 6.7%
Q3: 6.6%
Q4: 6.3%

From a cross country perspective, monetary policy stance is typically characterized as accommodative, neutral or tightening, while an accommodative stance entails easy monetary policy that is geared towards stimulating the economy through softer interest rates. Tightening refers to contractionary monetary policy, whereby interest rates are hiked to restrain spending and curb economic activity, all with the objective of reigning in inflation, RBI governor Sanjay Malhotra said.

A neutral stance is typically associated with a state of economy which neither calls for stimulating economic activity nor calls for controlling inflation by curtailing demand. Therefore, it provides the flexibility to the central bank and the MPC to move in either direction on the basis of the evolving economic conditions.

In our context, the stance of monetary policy signals the intended direction of the policy rates going forward accordingly with respect to the policy rate, which is the mandate of the MPC.

Today's change in stance from neutral to accommodative means that going forward, in the absence of any shocks, the MPC is considering only two options, that is status quo or a rate cut. Let me also clarify that the stance should not be directly associated with liquidity conditions.

While liquidity management is important for monetary policy, including decisions related to policy rate, it is an operating tool with the RBI for various purposes, including monetary policy transmission, monetary policy decisions to change policy rates do, however, have implications for liquidity management being the operational tool to carry out the policy changes. To summarize, our stance provides policy rate guidance without any direct guidance on liquidity management.

RBI governor Sanjay Malhotra also announced that it was decided to change the stance of the monetary policy from neutral to accommodative.

According to RBI governor Sanjay Malhotra, the Monetary Policy Committee unanimously voted to cut the repo rate by 25 basis points to 6%.

RBI governor Sanjay Malhotra announced that the MPC has decided to cut the key policy repo rate by 25 basis points.

Will RBI cut repo rate? Most analysts expect a 25 basis points cut especially as CPI inflation is steadily coming down and the global economic turmoil may require the central bank to support India’s GDP growth.

Global markets are reeling from the shock of Donald Trump’s aggressive trade policies. Risks of global slowdown or even a recession loom large. In such a scenario, how protected is the Indian economy? While most analysts believe that India’s domestic fundamentals will help it tide over this phase, the Indian economy will definitely take some git to its GDP growth with the 26% tariff and the global slowdown.

Consumer prices in India probably increased in March at a similar pace to February, breaking a four-month trend of falling inflation rates, according to a Reuters poll. The surge in gold prices counterbalanced stable food costs during this period.

Agricultural product prices had shown consistent deceleration over the previous four months, but appeared to reach their lowest point in March. This stabilisation occurred as the agricultural sector faced irregular rainfall patterns and heat waves across the country.

Stock market today: BSE Sensex and Nifty50, the Indian equity benchmark indices, opened in red on Wednesday ahead of RBI’s monetary policy review. While BSE Sensex dipped over 350 points, Nifty50 was below 22,450. At 9:16 AM, BSE Sensex was trading at 73,874.49, down 353 points or 0.48%. Nifty50 was at 22,423.10, down 113 points or 0.50%.

RBI Governor Sanjay Malhotra is scheduled to deliver the Monetary Policy Statement at 10:00 AM, followed by a media interaction at 12:00 PM. During the press conference, he will provide explanations for the committee's decisions and respond to questions from journalists.

Economists remain divided in their predictions regarding the RBI's upcoming decision. A segment of experts suggests a 50 basis points (bps) reduction in policy rates to boost economic growth. However, another group anticipates a conservative 25 bps reduction, highlighting ongoing inflation concerns as a significant consideration for the central bank.

Market expectations largely factor in a repo rate cut, with several financial institutions predicting the policy stance to change from "neutral" to "accommodative," along with measures to sustain excess liquidity conditions.

According to Citi Research's analysis, the effect of US tariffs on India's GDP would be approximately 0.06%. They forecast three separate 25-basis-points reductions in 2025, with the initial cut scheduled for Wednesday, aimed at managing potential growth risks in the domestic economy.

Indian equities are expected to begin trading on a negative note on Wednesday, following worldwide market declines triggered by rising trade conflicts, whilst market participants await the Reserve Bank of India's monetary policy verdict regarding interest rate reduction and growth initiatives. Additional Asian bourses declined, as the MSCI Asia ex-Japan index fell 1%. Japan's Nikkei 225 recorded a 2.7% decrease.

In the previous session, US stock markets tumbled after the announcement that 104% tariffs on Chinese goods would become effective shortly after Wednesday midnight, raising concerns about "stagflation".

The upcoming policy announcement and media interaction by Malhotra will draw attention, particularly regarding the RBI's assessment of how Trump's 26% tariffs on Indian exports to the US might affect the economy. Despite India having lower reciprocal tariffs compared to China and Vietnam, analysts predict the South Asian economy could face a growth reduction of 20-40 basis points.

The economic situation might necessitate more substantial monetary easing this year than previously expected. According to Morgan Stanley analysts Upasana Chachra and Bani Gambhir, if US tariffs impact the economy significantly, interest rates could decrease to 5% during this easing cycle. They noted in their recent client communication that the "RBI will likely need to support domestic demand".

The RBI's approach to market fluctuations will be under scrutiny, according to a Bloomberg report. Recent market movements showed concerning trends, with stock indices declining by approximately 3%, the rupee weakening by 0.7%, and 10-year bond yields increasing by two basis points.

India's economy likely grew by 6.5% during the previous fiscal year, marking its slowest growth rate since the Covid-19 pandemic. The situation could worsen due to unexpectedly high US tariffs. Financial analysts are revising their growth predictions downwards for the ongoing year, with Goldman Sachs Group Inc. reducing its forecast to 6.1% from 6.3%, significantly lower than the RBI's projection of 6.7%.