RBI cuts policy rate to 6 per cent, slashes GDP growth outlook for India

The 54th monetary policy committee (MPC) deliberations concluded on Wednesday with the Reserve Bank of India (RBI) announcing yet another rate cut. RBI Governor Sanjay Malhotra announced that the MPC decided to cut the policy rate by 25 basis points to 6 per cent, making it the second rate reduction in 2025.

However, the RBI Governor also announced that the apex bank cut India’s GDP growth projection for FY2026 to 6.5 per cent from the earlier estimate of 6.7 per cent.

Moreover, the rate-setting committee of the RBI decided to change its policy stance to ‘accommodative’ from ‘neutral’, said Malhotra, who chaired his second MPC meeting.

Noting the latest disruptive developments on the global stage, the RBI Governor aassured that the central bank “is on alert”. Uncertainties cloud the economic outlook across regions due to the latest trade-related measures, added Malhotra.

The 25bps rate cut follows the February cut, when the RBI returned from a hiatus of almost five years—that, too, at a time when fears of global trade war triggered by Donald Trump-induced tariffs grip markets world over.

Last week, US President Donald Trump slapped a 26 per cent reciprocal tariff on India, which led to Citi and Goldman Sachs cutting the country’s growth outlook. This contrasted the earlier RBI economic growth forecast of 6.7 per cent for fiscal 2025-2026, leading to a further cut in GDP projections to 6.5 per cent announced on Wednesday.

Following the three-day MPC discussions, Malhotra stated that the RBI presented the policy rate guidance without liquidity management guidance.

The RBI also cut the fiscal 2026 Consumer Price Index (CPI) inflation projections to 4 per cent due to good agricultural output and falling crude oil prices.

The RBI governor also assured that India’s forex reserves, which stood at $676 billion on April 4, were sufficient to cover for imports of 11 months.

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