RBI cuts interest rate, lowers GDP forecast

Amid uncertainty

- Roshan Kishore

NEW DELHI: As the world deals with the unprecedented uncertainty triggered by the Trump administration's reciprocal tariffs, the Reserve Bank of India (RBI) has made it loud and clear that it will support economic growth — it reduced its estimate of growth for the current year marginally to 6.5% — going forward.

The Monetary Policy Committee (MPC) of RBI made a unanimous second consecutive reduction in its policy rate — the one at which RBI lends money to banks — bringing it down by another 25 basis points (one basis point is one hundredth of a percentage point) to 6%. What made the latest reduction more emphatic than February's cut is a change in policy stance from neutral to accommodative. Governor Sanjay Malhotra also made it clear that the policy stance shifting to neutral will almost certainly lead to more rate cuts going forward.