Rate action with eye on trade war

US tariffs and other headwinds will need RBI to be nimble on liquidity and forex management

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That the Monetary Policy Committee (MPC) would cut interest rates by 25 basis points was the consensus among analysts. By doing exactly that and also changing the policy stance from neutral to accommodative, the Reserve Bank of India has made it clear that it intends to support economic growth going forward. The Governor's statement, while explaining the change in policy stance, clearly suggests that the central bank is not ruling out more rate cuts going forward. The more interesting question is whether this is going to be enough to insulate—if not entirely, then partially—the Indian economy from the ongoing global turbulence.