RBI MPC's Consecutive Rate Cuts Will Protect Indian Economy Against Tariff Shocks: Industry Bodies

The RBI on Wednesday slashed the key interest rate by 25 basis points to 6 per cent providing relief to home, auto and corporate loan borrowers.

CII Director General Chandrajit Banerjee termed the decision to continue with the rate easing cycle as timely and prudent.

Source : ABPLIVE AI

The Reserve Bank's move to lower its benchmark repo rate for the second time in a row will cushion India's economy against external shocks in the face of reciprocal tariffs imposed by the US that has triggered a global turmoil, industry bodies said on Wednesday.

The RBI on Wednesday slashed the key interest rate by 25 basis points to 6 per cent providing relief to home, auto and corporate loan borrowers.

CII Director General Chandrajit Banerjee termed the decision to continue with the rate easing cycle as timely and prudent.

"The rate cut coupled with the shift in monetary policy stance from 'neutral' to 'accommodative', too, is a big positive," Banerjee said.

The RBI's rate cut, and stance change reflect concerns about the impact of slower global growth on domestic economy and a relatively benign outlook for domestic inflation, he added.

CII is of the view that RBI's accommodative monetary policy combined with the government's growth-centric fiscal policy will help boost domestic growth amidst global economic turmoil, Banerjee added.

MPC's decision to reduce the repo rate to 6 per cent and adopting accommodative stance will provide a cushion to Indian economy from adverse effects of global economic uncertainty, while at the same time boost economic growth, said Hemant Jain, President, PHDCCI.

The relaxation in income taxes announced during Budget 2025-26 along with reduction in interest rates will improve consumer sentiment, which will accelerate GDP growth via uptick in private final consumption expenditure, he said.

On the industry front, reduction of policy rate will lower debt servicing costs providing extra cushion to the industry to absorb the external shocks such as the US tariff announcements recently, added Jain.

Buoyed by a strong seasonal correction in vegetable prices, assumption of normal monsoon and substantial reduction in global crude oil prices, we expect inflation to remain within RBI target range in the coming quarters, he said.

In its previous policy in February, RBI had trimmed repo rate by 25 basis points to 6.25 per cent. This rate came after previous rate reduction in May 2020. 

(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)