India’s central bank is expected to implement three more rate cuts this year, totaling 75 basis points, as economic growth slows due to import tariffs imposed by the United States, according to Citibank economists. Citi’s revised forecast suggests a total of 100 basis points in rate cuts for 2024, aligning with projections from JPMorgan and Nomura. The Reserve Bank of India (RBI) had already reduced the repo rate by 25 basis points in February, bringing it down to 6.25%—its first rate cut in nearly five years.

Samiran Chakraborty, Citi’s chief India economist, noted that the 27% tariff imposed by the US on Indian imports could negatively impact India’s GDP growth in 2025-26 by approximately 40 basis points. The central bank had projected economic growth of 6.7% for the current financial year in its February estimates. Inflation is expected to average 4.2% this year, creating room for additional rate cuts.

The RBI’s rate-setting committee is scheduled to meet next week, with a decision due on April 9. A Reuters poll of economists anticipates a 25 basis point cut during this meeting. However, Citi assigns only a small probability to a larger 50 basis point reduction. India’s economy has been grappling with external pressures, including trade restrictions and global market uncertainties. The impact of US tariffs on key Indian exports is raising concerns over long-term economic stability. With inflation relatively under control, the RBI may continue easing monetary policy to support growth, but the extent of future cuts will depend on evolving economic conditions and global trade developments.

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