**RBI Slashes Benchmark Policy Rate Amidst Lower Inflation and Growth Concerns**

India's central bank has made a significant move by cutting its benchmark policy rate to 5.5%, down from 6%. This rate reduction marks the third consecutive cut since February and is lower than the median estimate of 5.75% as per a Reuters poll.

RBI Governor Sanjay Malhotra explained in a livestream that the rate cut was prompted by a substantial softening in inflation and growth figures that have not met the country's aspirations in the current challenging global environment. The rate adjustment follows a robust GDP growth rate of 7.4% year-on-year for the fiscal fourth quarter, surpassing the 6.7% forecasted by Reuters-polled economists. However, despite this better-than-expected quarter, the central bank has maintained its full-year GDP growth estimate at 6.5%, significantly lower than the 9.2% growth recorded in the previous financial year ending in March.

Malhotra expressed optimism about India's economic stability and potential, stressing that while growth concerns had been previously highlighted due to the looming threat of U.S. tariffs, the economy still holds significant strength and opportunity.

Adding to the central bank’s rationale for the rate cut is the noticeable downtrend in inflation, which was recorded at 3.16% in April, the lowest since July 2019. The RBI has revised its inflation outlook down to 3.7% for the current financial year from an earlier forecast of 4%, with Malhotra indicating the possibility of inflation undershooting this target. Most projections suggest continued moderation in the prices of essential commodities, including crude oil.

Despite the aggressive rate cut, the RBI has stated that there is limited room left for further monetary policy measures to support growth. As a result, the monetary policy stance has been shifted to "neutral" from "accommodative." Malhotra emphasized that the Monetary Policy Committee will closely monitor incoming data and evolving conditions to balance growth and inflation effectively moving forward.