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US Tariffs and India: SBI, UBS Warn of Disinflation Risk

5 April 20251 min read
ECONOMYUS Tariffs andIndia: SBI, UBSWarn ofDisinflation Risk5 April 2025safalsetu.com

Why in the news

US reciprocal tariffs, with India taxed relatively lightly, may divert cheap goods to India and push inflation down.

Views compared

InstitutionView
SBIDownward inflation pressure; cheap goods may flood markets, helping consumers short term but hurting local manufacturers
UBSAdditional 50 bps cut possible; also currency flexibility, liquidity support, possible regulatory easing
Emkay GlobalRecession risk and disinflation from weaker commodity prices and supply gluts; India may feel an EM Asia slowdown

Rate timeline

  • May 2022 to Feb 2023: hikes totalling 250 bps.
  • October 2023: stance moved from “withdrawal of accommodation” to “neutral”.

Exam angle

  • Terms: reciprocal tariffs, dumping, disinflation, basis points.

Test yourself

1. How much additional rate cut did UBS see scope for in the current monetary cycle, after the 25 bps February repo cut?

UBS sees scope for an additional 50 bps rate cut.

2. By how much did the RBI raise rates between May 2022 and February 2023, as recalled in the tariff-impact notes?

Rates rose by 250 bps over that period.

3. Which firm warned of material downside risks to India's 6.5% FY26 GDP growth forecast owing to tariffs?

Emkay Global flagged downside risks to the 6.5% FY26 growth forecast.

This topic is part of Daily Current Affairs 5 April 2025 (22 topics).

All topics of the dayDay quizApril 2025

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