RBI Governor Indicates Possible Rate Cut, Cites Moderate Risk from Reciprocal Tariffs

RBI Governor Sanjay Malhotra Hints at Possible Rate Cut Amid Global Trade Tensions

Amid escalating global trade tensions caused by U.S. President Donald Trump’s tariff measures, Reserve Bank of India (RBI) Governor Sanjay Malhotra has suggested that India may see a rate cut. He reassured that India is actively engaging in discussions with 75 countries to address the impact of tariffs on the nation’s economy.

India in Talks with 75 Nations to Alleviate Tariff Fallout: RBI Governor

Speaking with the Times of India, Malhotra disclosed that India is in talks with the U.S. and approximately 75 other countries to mitigate the repercussions of trade tariffs. He expressed hope that the effects of these tariffs on India’s growth will be minimal. The U.S. has imposed reciprocal tariffs on various countries, India included, in an effort to reshape global trade rules in favor of American economic interests.

Inflation and Growth Outlook Discussions with RBI Governor Sanjay Malhotra

Malhotra acknowledged that the central bank had slightly lowered India’s growth forecast by 20 basis points to 6.5% in its recent monetary policy review. He emphasized the importance of enhancing India’s integration into the global value chain to boost efficiency and productivity. Additionally, he highlighted the significance of focusing on internal growth drivers and the government’s efforts to meet fiscal deficit targets.

Tariffs’ Impact on Inflation and Growth Prospects: Insights from Malhotra

Addressing concerns over inflation, the Governor pointed out the dual effects of global tariffs on prices. He explained that while imported inflation may lead to rising prices, softer global demand could result in lower overall inflation. Malhotra stressed the need for India to diversify its trade relationships and integrate further into the global value chain to sustain growth.

RBI Governor Anticipates Rate Cut and Emphasizes Fiscal Stability

Looking ahead to the next Monetary Policy Committee (MPC) meeting in June, Malhotra hinted at a potential shift in the interest rate trajectory. He indicated that the recent policy shift towards accommodative stance could lead to either maintaining current rates or implementing a rate cut, with decisions influenced by the MPC. The Governor also expressed confidence in the government’s ability to adhere to fiscal deficit targets, citing past achievements and the ongoing efforts to manage deficits.