RBI Cuts Interest Rates Again: What It Means for Borrowers Amid US Tariffs

RBI Takes Action to Support Economy

In a significant move, the Reserve Bank of India (RBI) announced a reduction in the key interest rate by 25 basis points on Wednesday, marking the second consecutive cut aimed at bolstering an economy affected by retaliatory tariffs from the United States.

With this adjustment, the policy rate now stands at 6 percent, offering some financial relief to borrowers in sectors such as housing, automotive, and corporate loans.

Previously, in February, the RBI had also lowered the repo rate by 25 basis points to 6.25 percent, following a rate cut in May 2020. The last increase occurred in February 2023 when the rate was raised by 25 basis points to 6.5 percent.

The Monetary Policy Committee (MPC), led by RBI Governor Sanjay Malhotra, reached a unanimous decision to reduce the policy rate to 6.25 percent.

Additionally, the RBI has revised its GDP growth forecast down to 6.5 percent from an earlier estimate of 6.7 percent, citing global economic uncertainties.

This decision comes in the wake of US President Donald Trump's announcement of a substantial 26 percent reciprocal tariff on Indian imports, set to take effect on April 9.