India slashes rates as Trump tariffs threaten economic growth

India’s central bank has cut its benchmark interest rate by 0.25%, citing slowing growth and rising global trade tensions triggered by U.S. President Donald Trump’s recent tariff measures.

The Reserve Bank of India (RBI) lowered the repo rate—the rate at which it lends to commercial banks—from 6.25% to 6%. This marks the second rate cut in three months, following a reduction in February that ended nearly five years of steady or rising rates.

The RBI also revised down its growth forecast for the current financial year from 6.7% to 6.5%, warning that economic momentum could be further hampered by external pressures, including the impact of new U.S. tariffs. It projected similar GDP growth for the following year.

In a key shift, the central bank altered its monetary policy stance from “neutral” to “accommodative”, signaling a readiness to implement further rate cuts if needed to support the economy.

“The global environment has turned uncertain, and domestic indicators suggest the need for continued policy support,” the RBI said in its statement.

Analysts say the move reflects growing concern over weaker investment, slowing consumer demand, and the broader fallout of trade disputes on emerging markets like India.

Markets responded positively to the announcement, with stocks rising on hopes of more liquidity and easing borrowing costs for businesses and consumers.