RBI to cut borrowing costs further to protect domestic demand

According to minutes of Reserve Bank of India's latest monetary policy meeting, policymakers sought to reduce borrowing costs to protect domestic demand from a potential slowdown caused by the hefty tariffs imposed by U President Donald Trump. 

The RBI cut rates by 0.25 per cent and signalled a change in its policy stance to accommodative. That shift in the policy stance signals further rate cuts as the RBI is worried about growth. 

The minutes outlined policymakers' focus on growth amid slowing inflation. That suggests more rate cuts in the coming months. Ratings agencies have already lowered India's growth outlook for this year. 

Can RBI help sustain domestic consumption surge? 

While the RBI's response is expected to keep India's status as the fastest-growing major economy intact, easing domestic demand is a cause for concern. The RBI minutes mirrored those concerns, with policymakers pledging to boost growth and demand. 

While banks take time before passing on RBI rate cuts, the easing cycle will bring some Relief for Indians grappling with high interest rates on their loans. 

The equated monthly instalments, or EMIs on home, car, and personal loans will eventually come down as banks start to cut lending rates. 

But will this boost consumer demand? Or will growth take a significant hit from Trump's tariff rhetoric is to be seen.