RBI Bulletin on State of the Economy: Tariff Risks, India Resilient
Why in the news
The RBI’s monthly bulletin cautioned that trade wars after Donald Trump’s return as US President could hurt global growth and push up prices, while Indian fundamentals stayed firm.
Key facts
- Tariff war impact on US: inflation higher by 1.0-1.2%, GDP growth down 0.6 points in 2025, economy 0.3-0.4% smaller in the long run.
- By 17 March 2025 the US dollar had given up all gains since mid-November 2024.
- Gold touched a record $3,000 per ounce on 14 March 2025 on safe-haven demand.
India’s indicators
| Indicator | Reading |
|---|---|
| Headline inflation, Feb 2025 | 3.6% (7-month low; 4.3% in January) |
| Core inflation, Feb 2025 | 4.1% (3.6% in January) |
| Real GDP growth, Q3 FY25 | 6.2% |
| CD issuances (to 7 Mar) | ₹10.58 trillion, up 34% |
- Private consumption and government spending rose; construction, financial services and trade were strong.
- High-frequency data point to continued momentum in Q4 FY25.
Monetary policy and liquidity
- Repo rate cut by 25 bp in February 2025, the first in nearly five years; another cut was widely expected in April.
- Tight liquidity, caused by tax outflows and FPI withdrawals, was handled through OMOs, daily VRR auctions and dollar/rupee swaps.
- About ₹5.5 trillion of durable liquidity was injected during the quarter.
- Banks leaned more on certificates of deposit for funding.
Exam angle
- Source of the assessment: RBI monthly bulletin, State of the Economy article.
- Gold price record: $3,000 per ounce.