India’s central bank held its key interest rate as Donald Trump’s planned increase in tariffs on the country’s exports to the US threatens to send its economy into turmoil.
The Reserve Bank of India’s decision on Wednesday to keep the repo rate at 5.5 per cent was in line with most economists’ expectations. The central bank cut the rate by a higher than expected half percentage point in June to boost economic growth, taking the total reduction since the start of the year to 1 percentage point.
Trump last week imposed a 25 per cent tariff on imports from India, a higher level than faced by many regional peers, after prime minister Narendra Modi’s government failed to conclude a trade deal with Washington ahead of the US president’s August 1 deadline.