INDIA’S central bank delivered an outsized cut to its benchmark policy rate, bringing it to 5.5 per cent from 6pc, its lowest level since August 2022.
This also marks a third straight rate cut since February, and comes below the median estimates of 5.75pc in a Reuters poll.
RBI Governor Sanjay Malhotra said in a livestream that the move was taken as inflation had significantly softened, and growth has been “lower than our aspirations amidst a challenging global environment and heightened uncertainty.”
The decision came after a better-than-expected GDP growth figure in its fiscal fourth quarter, with the economy expanding 7.4pc year-on-year compared to the 6.7pc estimated by economists polled by Reuters.
However, the central bank held its full-year GDP estimate at 6.5pc, marking a sharp slowdown compared to the 9.2pc seen in the previous financial year, which ended in March.
“The Indian economy presents a picture of strength, stability and opportunity,” Malhotra said.
The RBI had highlighted growth concerns in its previous meetings amid the threat of tariffs from the United States.
Separately, the decision also comes as India’s inflation is largely on a downtrend, which also affords the RBI room to cut rates.
The most recent headline inflation reading for April was at 3.16pc, its lowest level since July 2019.
The RBI had revised its inflation outlook to 3.7pc in the current financial year, down from its earlier figure of 4pc, and Malhorta said that inflation could undershoot the target.
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