RBI Projects Strong Growth Amid Global Uncertainty; Hints at Further 50bps Rate Cut

Despite the pressures of rising global uncertainties, the Reserve Bank of India is in a positive mood regarding the economic growth prospects of the country. On April 9, 2025, the central bank cut the key repo rate by a further 25 basis points to 6.00%, thus making it the second consecutive reduction in the rate during the year. The intention behind the rate cut was to stimulate reasonably needed economic activity against the background of increasing trade tensions - especially because the U.S. slapped a 26% tariff on Indian imports. ​

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Policy Shift to Accommodative Stance

In an important change in policy, the RBI shifted from a "neutral" to an "accommodative" stance in the monetary policy. Such a change means that in case of need, it could take the decision to cut further rates to boost the economy. According to Governor Sanjay Malhotra, who spoke during the policy announcement on the impact of duties levied recently by the U.S., it is very difficult to calculate exact effects, though still, domestic growth is seen improving but not significantly. ​

Revised Economic Forecasts

Based on developments, the RBI has affirmed its pure macroeconomic projections. It revised its GDP growth estimate for FY 2024-25, reducing it from 6.7% to 6.5%. The current inflation outlook has been reduced from 4.2% to 4%. All these modifications suggested a very balanced view of the RBI on the changing economic scenario while keeping growth on one side and price stability on the other.

Market Reactions and Sectoral Impact

Indian stock markets sagged on April 9, 2025, notwithstanding the proactive RBI measures. The Nifty 50 index ultimately closed at 22,372.7, down 0.72%; while the BSE Sensex went down by 0.58% to close at 73,791.9. IT and pharma were the biggest losers with declines of 3 and 1.8%, respectively, due to sensitivity to the U.S. markets and expected tariff consequences.

Currency Dynamics and Trade Concerns

The recent tariffs placed by the U.S. have put some further pressure on the rupee, which has depreciated by about 1.2% since the time of announcement, thanks to the decrease in the interest rates by the RBI.

A weaker rupee could provide a booth to exports related sectors, while at the same time, it raises concerns regarding imported inflation. Currently, the RBI wants to help reduce volatility in the currency rather than target specific exchange rate levels to create a pathway toward overall economic stability.

Future Outlook and Policy Directions

According to economists, further cuts in interest rates by the RBI may be implemented through the year so far, for a total of 50 basis points in a bid to support the Indian economy in these difficult times. With such a stance, the central bank has committed itself to supporting growth with regard to other global trade tensions and external challenges.

It can be concluded that recent policy decisions taken by the RBI apply a central strategy of counteracting the domestic economic indicators in their interplay with global uncertainties. They wish to be optimally accommodative in every way possible by changing key economic parameters to ensure an environment of sustained growth while keeping an eye open for the new challenges that may emerge.