New Delhi, Apr 4 (KNN) Citibank expects the Reserve Bank of India (RBI) to implement three additional rate cuts in 2024, totalling 75 basis points, as India’s economic outlook weakens due to US-imposed import tariffs.
With this forecast, Citibank aligns with projections from JPMorgan and Nomura, anticipating a cumulative 100 basis points cut this year.
The RBI had already reduced the repo rate by 25 basis points to 6.25 per cent in February—the first cut in nearly five years.
A 27 per cent tariff imposed by the United States on Indian imports could trim India’s GDP growth in the 2025-26 financial year by approximately 40 basis points, according to Samiran Chakraborty, Citibank’s chief India economist.
“If these tariffs significantly slow global growth, India’s exports could face a sharper decline,” Chakraborty noted. “Additionally, prolonged uncertainty regarding tariff negotiations might deter private investment, further impacting GDP.”
India’s economy is projected to expand by 6.7 per cent in the current financial year, per the RBI’s February estimate. Inflation is expected to average 4.2 per cent in 2024, providing leeway for monetary easing.
The RBI’s Monetary Policy Committee is set to convene next week, with a decision on interest rates due on April 9. A Reuters poll of economists suggests a 25 basis point cut at the meeting. However, Citibank assigns only a “very small probability” to a larger 50 basis point reduction in April.
The extent of future rate cuts will likely depend on inflation trends and the broader impact of trade tensions on India’s economic momentum.
(KNN Bureau)
