As Trump’s tariffs trigger recession fears, RBI delivers a 25 bps rate cut in its April policy meet to support growth and ease lending costs.
April 9, 2025: The Reserve Bank of India (RBI) has announced a 25 basis point cut in the key repo rate, bringing it down to 6%, in a move aimed at cushioning the Indian economy from global headwinds sparked by the escalating US-China trade tensions. The decision was announced during the central bank’s first bi-monthly monetary policy review for FY26 on Wednesday, April 9.
RBI Governor Sanjay Malhotra confirmed that the Monetary Policy Committee (MPC) voted unanimously in favor of the rate cut, which will immediately lower borrowing costs for banks and is expected to make EMIs cheaper for individual borrowers.
“We are committed to maintaining macroeconomic stability while supporting growth, especially in light of global uncertainties and weather-linked disruptions,” said Governor Malhotra.
The central bank refrained from deeper monetary easing to keep flexibility in hand amid a volatile global environment following US President Donald Trump’s new 104% tariffs on Chinese goods.
What it means for you:
- Home and personal loan EMIs are likely to come down as banks are expected to pass on the rate cut benefits to customers.
- Loan affordability may improve, potentially boosting housing demand and consumer sentiment.
- The move is also seen as a step toward stimulating domestic demand amid recessionary concerns globally.
This rate cut follows February’s similar move when the RBI reduced the repo rate from 6.5% to 6.25%—marking its second consecutive cut in less than three months.
The RBI also hinted at a possible shift in its policy stance to ‘accommodative’ in future meetings, should inflation remain subdued and growth pressures persist.
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