In response to escalating global uncertainties, India’s central bank has cut its key interest rate by 25 basis points to 6.00%, marking its second consecutive reduction this year. The Reserve Bank of India (RBI) also shifted its monetary policy stance from "neutral" to "accommodative," signaling the possibility of further cuts to support economic growth.

The move follows the recent imposition of 26% U.S. tariffs on Indian goods, which have intensified fears of a global slowdown and financial instability. India becomes the second country, after New Zealand, to respond with monetary easing.

Governor Sanjay Malhotra acknowledged that while India’s growth is recovering, it remains below the country’s aspirations. All six members of the Monetary Policy Committee voted in favor of the rate cut, citing a benign inflation outlook and the need to shield the economy from global headwinds.

The RBI now forecasts GDP growth at 6.5%, slightly down from its previous 6.7% estimate, and inflation at 4%. Economists warn that U.S. tariffs may reduce growth by 20–40 basis points in the current fiscal year, with further rate cuts likely if global conditions worsen.