Governor Malhotra says Donald Trump's reciprocal tariffs on India ‘bigger worry than inflation’

Sanjay Malhotra, the governor of the Reserve Bank of India (RBI), stated on Wednesday that the central bank is more worried about the effect of US President Donald Trump's tariffs on India's GDP than it is about inflation. During the post-Monetary Policy press conference, Malhotra stated that the RBI had reduced its prediction for India's GDP growth because of concerns surrounding tariffs.

On the same day, the US reciprocal tariffs went into force, which also included a 26% tax on Indian imports. The RBI lowered its Real GDP prediction for the fiscal year 2025–2026 from 6.7% to 6.5% as a result. The current GDP forecast is 6.5% for the first quarter, 6.7% for the second, 6.6% for the third, and 6.3% for the fourth.

"The recent trade tariff-related measures have exacerbated uncertainties clouding the economic outlook across regions, posing new headwinds for global growth and inflation," he stated in his earlier announcement speech. "The US dollar has weakened significantly amid this turbulence, bond yields have softened significantly, equity markets are correcting, and crude oil prices have dropped to their lowest level in more than three years," he continued.