In a decisive move to spur economic momentum, the Reserve Bank of India (RBI) has slashed its policy rate by 25 basis points to 6%, signaling a shift to an 'accommodative' stance from its previous 'neutral' posture.
RBI Governor Sanjay Malhotra, addressing a briefing today, underscored the central bank’s resolve to navigate a fast-changing global landscape while anchoring domestic stability.
The rate cut, decided by the Monetary Policy Committee (MPC), comes as global trade uncertainties—exacerbated by recent US tariffs and shifting economic winds—threaten to weigh down India’s merchandise exports and put pressure on the rupee.
“The global outlook is evolving rapidly, and these uncertainties could ripple through currencies and trade,” Malhotra warned. Yet, he struck an optimistic note on the home front, pointing to a pickup in investment activity driven by sustained capacity utilization and a robust forex reserve of $676 billion as of April 4, offering an 11-month import cover.
The RBI’s policy tweak isn’t just about rates—it’s a broader recalibration. Malhotra highlighted that the accommodative stance offers guidance on rates without tying the bank’s hands on liquidity, which swung from a January deficit to a surplus by March thanks to deft management. “We’re committed to ensuring sufficient system liquidity,” he assured, adding that the central bank remains agile, ready to deploy “clear, consistent, and credible” measures to safeguard the economy.
On growth, the RBI tempered its FY26 GDP forecast to 6.5% from 6.7%, reflecting global headwinds. However, inflation projections were slashed to 4% from 4.2%, buoyed by easing uncertainties around Rabi crops and record wheat output signaled in second advance estimates. “We’re aiming for non-inflationary growth built on improved demand and macroeconomic balance,” Malhotra emphasized.
The central bank also unveiled forward-looking reforms: expanding co-lending beyond priority sectors and proposing that the National Payments Corporation of India (NPCI) adjust UPI transaction limits for person-to-merchant payments based on economic needs. These steps, Malhotra said, reflect the RBI’s intent to foster innovation while keeping a steady hand on stability.
Globally, the picture is less rosy. “Exceptional uncertainties” loom large, with trade-related measures clouding regional outlooks, Malhotra noted. Yet, he positioned monetary policy as a critical anchor, balancing domestic priorities against external shocks. For now, the rate cut to 6%—a shot of adrenaline for borrowers and businesses—marks a gamble that India can outpace the gathering storm, with the RBI standing vigilant at the helm.