RBI MPC meet: Will another rate cut follow? Global tariffs add a new twist

All eyes are on the Reserve Bank of India (RBI) as it begins its first Monetary Policy Committee (MPC) meeting of FY2025-26 on Monday, April 7. The three-day review will wrap up on Wednesday, April 9, with the policy decision slated for a 10 AM announcement.

This meeting comes on the heels of February’s milestone move, where the RBI slashed the repo rate by 25 basis points—from 6.5% to 6.25%—marking the first cut in nearly five years. With inflation easing, many analysts expect another 25-bps cut in this round, according to CareEdge Ratings. Bank of Baroda projects a cumulative cut of 75 basis points during the year.

The repo rate, a key monetary tool, determines the interest at which the RBI lends to commercial banks. Lowering it further would signal the central bank’s commitment to supporting economic growth.

Meanwhile, global trade dynamics have taken a sharp turn. On April 2, US President Donald Trump announced steep new tariffs—ranging from 11% to 49%—on imports from 60 countries, including India and China. These tariffs are set to take effect on April 9, coinciding with the RBI policy reveal.

While the new US trade policy could hurt several Asian exporters like China, Vietnam, and Bangladesh, analysts say it may open up fresh opportunities for Indian exporters to gain ground in the US market.

India has largely kept inflation within the RBI’s 2–6% target range, staying close to the medium-term goal of 4%. With inflation relatively tamed, the RBI may now lean further into growth-supportive measures—though the global headwinds will add complexity to its decision.

As the RBI prepares to tweak its policy stance, the big question remains: will another rate cut be announced, or will global uncertainties prompt a more cautious approach?