RBI cuts repo rate by 25 bps to 6% amid market uncertainty, tariff turmoil

The Reserve Bank of India (RBI) has cut the repo rate by 25 basis points to 6% during its April 9 policy review. This means interest rates on home, personal, and vehicle loans—as well as deposit rates—are expected to come down soon.

The RBI’s Monetary Policy Committee (MPC) also changed its stance from “neutral” to “accommodative,” indicating more rate cuts could follow.

The RBI now expects India’s GDP to grow at 6.5% in 2025–26, slightly lower than the earlier estimate of 6.7%. Retail inflation is forecasted to be around 4% for the same period.

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This is the second rate cut under Governor Malhotra who took charge earlier this year. The decision comes as global economic uncertainty grows, especially after US President Donald Trump announced a 26% tariff on Indian exports. This move is expected to slow India’s growth by 20–50 basis points.

"Our stance provides policy rate guidance without any direct guidance on liquidity management," said the Governor.

"In our context, the stance of monetary policy signals the intended direction of 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, absent any shocks, the MPC is considering only two options – status quo or a rate cut," he further said.

To support the economy, the RBI has already infused over $80 billion into the banking system over the past two months.

The RBI has slightly lowered its growth forecast for FY26. It now expects GDP to grow at 6.5% in Q1, 6.7% in Q2, 6.6% in Q3, and 6.3% in Q4, compared to earlier estimates of 6.7%, 7%, 6.5%, and 6.5%.

Governor Malhotra, while announcing the April policy decisions, said inflation has come down—helped by better food prices—and is likely to ease further in FY26. This should bring more relief to Indian households.

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