Dear Readers,

Happy Wednesday! After a long weekend, the Indian stock market bounced back strong on Tuesday, recovering all the ground it lost following Trump’s tariff announcement on April 2. Every sector was in the green, showing solid buying action across the board. Asia caught the good vibes too—markets across Japan, Australia, and South Korea performed strongly, following Wall Street’s tech-driven rally. 

While on economy front – India’s retail inflation dipped to just 3.34% in March, marking its lowest level in nearly six years.  

So, what does that mean for the bigger picture? Well, with inflation cooling off, the central bank made a move last week and cut the repo rate – that’s the rate at which it lends to banks.

RBI Just Shifted Gears — Here’s What That Means

On April 9, India’s monetary policy committee met for the first time this financial year. While a rate cut was widely expected, the MPC surprised with a change in stance as well. Its stance moved from “neutral” to “accommodative”, after having changed from “withdrawal of accommodation” to “neutral” only in December 2024.

The change in stance, while mostly symbolic, is also indicative of an easier monetary policy framework in India amidst the global uncertainties. RBI Governor Sanjay Malhotra was clear in his statement when he said that “(amidst) challenging global economic conditions, the benign inflation and moderate growth outlook demands that the MPC continues to support growth.”

The MPC “also noted the rapidly evolving situation requires continuous monitoring and assessment of the economic outlook,” Malhotra said.

Revised Growth Outlook

The fear is real too. RBI, which is often criticised for being too optimistic about India’s growth story, revised its fiscal 2026 gross domestic product estimates lower by 20 basis points to 6.5%. This was followed by Moody’s which lowered India’s growth projections by 30 bps to 6.1% for the current fiscal.

Inflation And Liquidity: Turning Tides

In addition, inflation is expected to be lower too. For March, consumer price indexed inflation was at 3.34%, a 67-month low. Even RBI estimates that the inflation rate for the year will be at 4%, which is the MPC’s target.

System liquidity, which till recently was in a deep deficit, has switched into a surplus of nearly Rs 1.7 lakh crore. The accommodative stance means that the RBI is comfortable with the level of liquidity surplus right now. Of course, this surplus is also essential to bring down interest rates in the economy which so far were suffering from weak transmission. The effect was immediate too, with major banks announcing cuts in fixed deposit rates and even savings account rates. As lower cost of funds makes it way into the system, lending rates will also start coming down. Or, at least, that is the expectation.

Global Divergence: Fed Holds, RBI Moves

While RBI was quick to act, the US Federal Reserve continues to hold tight on rates, citing potential inflation pressures from the tariff announcements. Even as President Donald Trump has called for a 90-day pause on the tariff measures for most trading partners, excluding China, he is still seeking a rate cut from the US central bank.

Will Trump force the Fed’s hand? Or will Jerome Powell prevail in his prudence? That’s what the rest of the world is watching out for. RBI, on its part, has done what it could to boost growth.

Stay tuned, because how this policy plays out in the coming months could shape everything from market moves to household budgets.

Feature Five

1. Angry residents, anxious bosses, and concerned restaurateurs were the vibe of India’s financial capital on Monday, before the Mumbai Water Tankers’ Association called off its strike after four days, Charu Singh reports.

2. This summer, Indian travelers heading to Europe can expect to save on costs, with airfares to key destinations like Switzerland and Paris dropping 2-6% during the peak months of April to June. Read Sesa Sen’s exclusive for more.

3. The first phase of the bilateral trade agreement between India and the US can be out within the tariff-pause period of 90 days, government sources told Rishabh Bhatnagar.

4. Pankaj Chadha, chairman of the Engineering Export Promotion Council, said Indian exporters should brace for “fierce competition” from China as both countries now look to expand into overlapping markets. Read more.

5. Less than two years after being onboarded to 360 One WAM Ltd. for starting its global unit, veteran banker Vikram Malhotra has resigned from the firm, along with 10 other private bankers who were a part of his team, people aware of the matter told Agni Dev and Hiral Dadia.

Caught My Attention

Following the repo rate cut by the RBI, India’s largest private lender HDFC Bank has trimmed its interest rate on savings account by 25 bps to 2.75%. Notably, the bank has not raised the interest rate since 2011. But over the past 14 years, it has trimmed the rates from 4% to the current levels.

That’s all for now. The world of economy is expected to keep buzzing this week as well, and we’ll keep breaking the key trends down for you.

Until next week, this is Shrimi signing off!

. Read more on Opinion by NDTV Profit.The RBI’s rate cut move was followed by retail inflation easing to 3.34%, the lowest since August 2019, as per the data released for the month of March.  Read MoreOpinion, Economy & Finance, Exclusive 

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