India's central bank cuts rates more than expected to boost growth

The Reserve Bank of India (RBI) cut its Benchmark Repo Rate by 50 basis points to 5.5 percent, citing easing inflation and the need to support economic growth. The move followed a policy review by the Monetary Policy Committee and came in response to a more favorable inflation outlook. Consumer price inflation has declined to 3.2 percent, allowing room for monetary easing. Despite strong GDP growth at 6.5 percent, the central bank aims to further stimulate domestic demand.

Sanjay Malhotra, Governor, Reserve Bank of India said "Amidst heightened volatility in capital flows and exchange rates, coupled with constrained policy space, central banks of emerging market economies have a tougher task to stabilise their economies against global spillovers. In this global milieu, the Indian economy presents a picture of strength, stability and opportunity. "

The rate cut is also intended to buffer India’s economy against global trade uncertainty and the lingering impact of US tariffs. The RBI also signaled readiness to act decisively to maintain momentum amid external risks.