The Reserve Bank of India slashed interest rates for the second time in a row on Wednesday, signalling more cuts ahead as it seeks to shield the economy from the impact of fresh US tariffs.

The Monetary Policy Committee (MPC) voted unanimously to reduce the repo rate by 25 basis points to 6%, following a similar cut in February. The decision brings borrowing costs to their lowest since November 2022, amid falling inflation and declining oil prices.

Announcing the decision, RBI Governor Sanjay Malhotra said the policy stance had shifted from “neutral” to “accommodative,” opening the door to further easing.

The move coincided with the implementation of a steep 26% US tariff on Indian exports, which analysts warn could shave 20–40 basis points off GDP growth this fiscal year. Reflecting this, RBI downgraded its growth forecast for 2025–26 from 6.7% to 6.5%. Inflation expectations were also revised down to 4% from 4.2%, keeping within the central bank’s 2–6% target range.

Malhotra noted that while growth has begun to recover after a sluggish first half of the fiscal year, it remains below expectations. Meanwhile, a sharper-than-expected drop in food inflation offers some relief, but global risks and weather-related shocks remain a concern.

Malhotra, who took over as governor in December, has adopted a pro-growth stance and cut rates and pumped over $80 billion into the banking system.

Lower rates are expected to boost credit demand, spur investment, and support job creation, offering a cushion to both businesses and consumers in an uncertain global environment.

Commenting on the interest rate cut, Manju Yagnik, Vice Chairperson of Nahar Group and Senior VP, NAREDCO, Maharashtra, said, “It is a welcome move for the housing sector’s upcoming fiscal year, FY26. Lower interest rates will make home loans more affordable, enhancing the purchasing power of potential homebuyers and stimulating demand across various segments of the real estate market.”

Vijay Karia, CMD, Ravin Group, added, “The RBI’s policy decision today is not only optimistic but industry aligned.  For the electrical and infrastructure sectors, this move strengthens our ability to invest, expand, also strengthens confidence to take bold steps in innovation and capacity-building.”  He added further, “The cable manufacturing industry actually caters to the core industries regarding infrastructure building and growth in power, where lower borrowing costs can be an uplifting strategy for working capital pressures and provide manufacturers, especially the SMEs and MSMEs.”