New Delhi, 9 April 2025: The Reserve Bank of India (RBI) is going to announce the first monetary policy of the financial year 2025-26 today. At 10 am, Governor Sanjay Malhotra will present this much-awaited decision in front of the country. This time the meeting is special because it is taking place at a time when US President Donald Trump’s reciprocal tariff has shaken the global economy. With India burdened with 26 percent tariff and fears of recession worldwide, the question is – will RBI cut the repo rate to accelerate growth, or will it take a cautious stance in view of inflation concerns?

In the last meeting of the last financial year, RBI reduced the repo rate by 0.25 percent to 6.25 percent. This was the first cut in two and a half years. Now experts believe that RBI can once again give relief of 0.25 percent, so that economic activities get a boost. But the uncertainty created by Trump’s tariffs is making this decision more complex.

The global crisis and the RBI’s challenge

The Trump administration imposed reciprocal tariffs on more than 60 countries in early April. The 26 percent tariff on India is lower than on other Asian countries—such as China (34 percent) and Vietnam (46 percent)—but it is bound to impact Indian exports and domestic demand. Amid turmoil in global stock markets and fears of a recession, the RBI faces a dual challenge—to keep inflation under control and support economic growth.

“This meeting is more important than usual. The impact of tariffs will be seen in the coming months, but right now we need to strengthen domestic demand,” says Mumbai-based economist Narinder Wadhwa. He believes a repo rate cut will allow banks to offer cheaper loans, which will bring relief to the middle class.

Inflation situation: Scope for a cut?

Retail inflation fell to 3.61 percent in February 2025, a seven-month low. March figures are yet to come, but experts estimate it to be around 4 percent. RBI’s medium-term target is also 4 percent, and the current figures create a favorable environment for a cut. HSBC Global Research report said, “We expect RBI to cut the repo rate by 0.25 percent. Also, additional steps can be taken to increase liquidity.” However, analysts at Goldman Sachs went a step further and said, “The slowdown in domestic activity in the first quarter and the fall in crude oil prices have made the path easier for RBI. But in June, the cut may be put on hold in view of the monsoon and global price trends.” This balance will not be easy for RBI. Middle class and real estate expectations The middle class can get the biggest benefit of the repo rate cut. Cheap home loans and car loans will not only reduce their EMIs, but can also revive the real estate sector. MRG Group MD Rajat Goyal says, “Real estate figures have been sluggish for the last few months. A reduction of 0.25 percent will help boost demand. The current level of inflation justifies this decision completely.” Delhi housewife Shikha Mehra, who has been planning to buy a house for the last one year, says, “If the EMI comes down a little more, it will be easier to fulfill our dream. Last year, we had to postpone the plan due to high interest rates.” Her hope reflects the feelings of millions of Indians. Impact of Trump tariff: Opportunity for India? Although Trump’s tariff has increased the risk of global recession, some experts consider it an opportunity for India. Tariff on India is lower than that of neighboring countries, which can give a competitive edge in terms of exports. “We can get the benefit of higher tariff on countries like China and Vietnam. But for this, it is necessary to strengthen the domestic economy,” says economist Pranjul Bhandari. He believes that RBI can choose the path of reduction to capitalize on this opportunity. What next?
This meeting of the RBI’s Monetary Policy Committee (MPC) started on 7 April and its result will be out today. After the 0.25 percent cut in February, this will be the second time when the middle class can get relief. But it will not be easy for Governor Malhotra to strike a balance between global uncertainty and domestic needs.

“We will also keep an eye on what stance the RBI takes regarding the impact of tariffs. This will not only be a question of rates, but will also be an indication of future strategy,” says Bank of Baroda Chief Economist Madan Sabnavis. If there is a cut, it will not only affect EMIs, but can also create new stir in the auto, real estate and banking sectors.

For now, the country’s eyes are fixed on 10 am. Will the RBI give priority to development, or will it keep rates stable while being cautious? This decision will determine the economic direction of the coming months.