RBI’s monetary policy has clearly pivoted but it faces a hazy path ahead

With America’s sudden trade onslaught taking the world to the brink of commercial chaos, the economic outlook for India, like for other countries, has taken a turn for the worse. While RBI’s February cut was the first since its post-pandemic inflation fight, its stance revision of 9 April confirms a monetary policy pivot towards fuelling growth. This was also the day that US ‘reciprocal tariffs’ were to kick in, which partly explains why the risk of India’s economy slowing was judged to outweigh that of inflation heating up. Though India’s domestic orientation acts as a shield, our global integration since 1991 exposes us to shocks via various channels. While steep tariffs are the front-end of what the US portrays as its ‘liberation’ thrust, back-burner issues like ‘currency manipulation’ may also get raked up.