India Cuts Interest Rate to 6% to Support Economic Growth

In a widely anticipated move, the Reserve Bank of India has cut its benchmark interest rate by 25 basis points, bringing it down to 6%. The decision aims to boost economic growth amid signs of slowing domestic activity and rising global pressures. The cut comes at a time when India is facing both internal challenges—such as a deceleration in GDP growth—and external risks, including global trade tensions and new tariffs imposed by the United States on imports from various countries, including India.

The central bank has shifted its monetary stance from neutral to accommodative, signaling its readiness to introduce further rate cuts in the coming months if economic conditions remain subdued. This shift highlights the government’s intent to stimulate the economy by making borrowing cheaper for both consumers and businesses.

At the same time, the bank has lowered its growth forecast for the current financial year to 6.5%, down from the previous estimate of 6.7%. Inflation expectations have also been revised downward from 4.2% to 4%, giving the central bank more flexibility to ease monetary policy without risking a significant spike in prices.

This rate cut sends a clear message to markets and investors: India is committed to maintaining economic stability and encouraging investment and spending. By reducing borrowing costs, the central bank hopes to boost demand and support a stronger economic recovery, while remaining cautious about inflationary pressures.