As global trade tensions rise, the Reserve Bank of India (RBI) finds itself at a critical crossroads. With the U.S. imposing new tariffs, and India experiencing mixed economic signals—cooling inflation but sluggish GDP growth—the RBI must decide whether to cut interest rates or maintain its current stance.
While inflation appears manageable, GDP growth has softened, prompting analysts to expect a dovish policy approach to stimulate the economy. The RBI already cut rates earlier this year and has been pumping liquidity into the banking system, totaling over ₹6 trillion. Lower global oil prices and a weakening dollar also provide a cushion for inflation control.
However, global market instability and weaker consumer demand—especially in export-driven sectors like gems and jewellery—pose risks. Economists suggest that stimulating domestic consumption should now be the central bank's focus. The upcoming policy review could offer more clarity on RBI's future moves, especially regarding liquidity management and rate adjustments.
Read the full article here: Reuters – RBI's moment to fly with the doves