Mumbai, April 9, 2025 – The Reserve Bank of India (RBI) cut its key lending rate by 25 basis points to 6% on Tuesday, a nimble move hours before Donald Trump’s 104% tariffs on Chinese imports took effect today. Governor Shaktikanta Das, in his first policy shift since December’s hold, signaled a pivot to shield India’s economy from the trade war’s fallout, even as inflation ticks up and growth cools.
The repo rate drop—the first since August 2024—follows Trump’s tariff escalation, adding 50% to last week’s 34% duty after China ignored his deadline to lift its own 34% levy. “Global uncertainties demand flexibility,” Das told reporters, per NDTV, citing a slowing GDP (6.7% in Q3 2024) and exports at risk from US-China tensions. The Sensex dipped 0.8% as markets weighed the cut against tariff jitters (The Economic Times).
India’s in a bind. Trump’s 10% global tariff threatens exporters, yet a weaker rupee (83.5 to USD) could cushion the blow—RBI’s banking on it. Inflation’s at 5.5%, above the 4% target, but Das sees room to boost liquidity. “Growth needs a nudge,” he said, eyeing cheaper loans for businesses hit by supply chain kinks. China’s counter-threats—curtailing US farm buys—might open doors for Indian agro exports, though.
Bankers cheered—SBI’s Dinesh Khara called it “timely”—but critics warn of inflation spikes if tariffs hike import costs (The Indian Express). Data paints the stakes: 2024 exports to the US hit $80 billion, with 20% tied to Chinese inputs. A Mumbai trader quipped on X, “RBI’s playing chess while Trump swings a hammer.” Posts reflect unease—will lower rates spark jobs or just fuel prices?
This isn’t panic—it’s pragmatism. With Modi pushing manufacturing and Xi eyeing India for trade detours, the RBI’s cut buys breathing room. The big question? Can India dodge the tariff crossfire, or will global chaos force tougher calls ahead?
