India central bank cuts interest rates as Trump tariffs kick in

AFP | Mumba

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India's central bank cut interest rates in the world's fifth-largest economy yesterday as US President Donald Trump's tariffs kicked in and policymakers warned of "challenging global economic conditions".

The cut, the second this year, aims to boost a slowing economy grappling with the impact Trump's sweeping tariffs.

The Reserve Bank of India (RBI) said the benchmark repo rate, the level at which it lends to commercial banks, would be reduced by 25 basis points to 6 percent.

The central bank's decision was announced the same day Trump's 26 percent tariff for the world's most populous nation came into effect.

Easing inflation concerns over the last few months have allowed the RBI to focus on perking up the Indian economy, whose growth has slowed in the last few quarters.

Trump's protectionist trade policies will likely add to growth pressures and present a challenge for Indian policymakers.

While New Delhi is not a manufacturing powerhouse, experts believe that high US tariffs will hurt billions of dollars of Indian exports across different sectors, including gems, jewellery and seafood.

Uncertainties’

Economists project that Trump’s tariffs drive will impact India’s GDP growth, with analysts at Goldman Sachs reducing their forecast for the current fiscal year from 6.3 to 6.1 percent.