Mumbai – As global markets reel under US President Donald Trump’s steep tariffs and rising uncertainty in world trade, the Reserve Bank of India (RBI) on Friday lowered its repo rate by 25 basis points to 5.25 percent.
The Monetary Policy Committee made the decision unanimously, aiming to provide relief to Asia’s third-largest economy struggling with weak inflationary pressure and a sustained decline in exports.
Some analysts had predicted that further rate cuts might be unlikely after RBI already slashed rates by more than 100 basis points in three earlier rounds this year. However, many economists argued that the escalating impact of US-imposed tariffs and reduced export orders justified an additional cut to support economic stability.
RBI Governor Sanjay Malhotra announced that the central bank will purchase over USD 1.1 billion worth of government securities through open market operations. He also revealed plans for a three-year dollar–rupee swap involving USD 5 billion to ensure adequate foreign exchange liquidity. Maintaining a “neutral stance,” the RBI has kept the door open for further rate reductions.
India currently faces multiple challenges, including falling exports, a volatile rupee, and slowing economic growth. Prime Minister Narendra Modi’s government has introduced measures such as consumption tax cuts and labour law reforms to stimulate economic activity.
Against the backdrop of global trade turbulence, the RBI’s latest rate cut is expected to provide some relief to industries, exporters, and consumers alike.
