India's Economic Outlook Brightens Amid Global Trade Challenges

NEW DELHI: The Reserve Bank of India (RBI) has hinted at the possibility of a third consecutive repo rate cut in June, according to the minutes of its April policy meeting. Radhika Rao, Executive Director and Senior Economist at DBS Bank, notes the policy stance has shifted to 'accommodative' from 'neutral', indicating a bias towards lowering rates to support economic growth.

Trade Optimism and Monetary Policy Adjustments

Rao highlights India's advantageous trade position, with relatively smaller exposure to US exports and lower tariff rates compared to some ASEAN countries. Positive signals from the US administration about a potential bilateral agreement have further boosted market sentiment.

Challenges and Opportunities Ahead

Despite global trade disruptions posing risks, the Monetary Policy Committee (MPC) members leaning dovish see room for further rate cuts, citing moderated inflation and sluggish growth. Market expectations align with this outlook, anticipating at least two more rate cuts in the coming year.

The RBI's recent policy adjustments, including a 25 basis points cut in the repo rate to 6%, aim to stimulate private consumption and corporate investment in a challenging global environment. Governor Sanjay Malhotra emphasizes the need for an accommodative monetary policy to navigate the evolving economic landscape.