RBI Governor Sanjay Malhotra’s post-MPC remarks signal a clear strategic shift in focus—from inflation control to safeguarding economic growth, amid rising global trade tensions triggered by US tariff hikes under President Donald Trump.
Key Announcements from the RBI MPC Meet
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Repo Rate Cut: The repo rate was reduced by 25 basis points, from 6.25% to 6%, marking the RBI’s first policy action in the new financial year (FY2025–26).
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This decision reflects the RBI’s confidence in current inflation trends while acknowledging downside risks to growth.
Malhotra’s Major Concerns: Growth > Inflation
Governor Malhotra stated:
“Worried about impact on growth than inflation.”
His comment stems from rising global uncertainties, particularly:
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US-imposed tariffs that could stifle global demand
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A potential slowdown in exports
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The risk of a broader global trade downturn, affecting India’s economic momentum
Despite recent moderation in inflation, Malhotra stressed that:
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External shocks from trade wars could lead to weaker global trade
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India’s export sectors (like textiles, pharma, and IT) may see reduced demand
Revised Growth Outlook for FY2025–26
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The RBI has lowered India’s growth forecast (specific numbers not disclosed in his comments, but implied a downward revision).
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This is due to a combination of external tariff pressures, slowdown in global trade, and uncertainty in investment flows.
Inflation Outlook Still Stable
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Malhotra confirmed that inflation is within the RBI’s target range (4% ±2%)
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With easing food and core inflation, policy leeway has emerged for the RBI to support growth without stoking price rises
India's Exposure to US Tariffs: Limited but Not Immune
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Malhotra emphasized:
“The impact of tariffs is much less on India than on some other countries.”
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However, he cautioned that wider global protectionism could erode trade confidence and reduce external demand, especially for Indian exports.
Stability of the Rupee & Forex Resilience
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The Indian rupee remains stable despite global currency volatility.
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Malhotra reassured that the RBI’s forex reserves are strong enough to cushion any external shocks, hinting at readiness for intervention if needed.
Coordination with the Government
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The RBI plans to work closely with the government to balance growth and inflation management, particularly if global trade disruptions deepen.
Quick Summary
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RBI cuts repo rate to 6% amid easing inflation.
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Focus now shifts to supporting growth, which faces global headwinds.
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US tariffs may not directly hit India hard, but global spillovers could affect exports.
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Rupee stable, and forex reserves robust, giving the RBI flexibility.
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A coordinated effort between RBI and govt is expected to steer the economy through turbulent global conditions.
