India cuts rates to 5.25% as expected as central bank flags ‘weakness in some key economic indicators'

Group 1: Monetary Policy and Economic Indicators - The Reserve Bank of India (RBI) cut its policy rate by 25 basis points to 5.25%, aligning with economists' forecasts, due to weakness in key economic indicators despite easing headline inflation [1] - The economy expanded by 8.2% from July to September, surpassing expectations, while inflation remains subdued [2] - Industrial activity fell to a 14-month low in October, with manufacturing PMI dropping to a nine-month low in November, indicating signs of economic slowdown [3] Group 2: Trade and Tariff Impact - Exports to the U.S. decreased for the second consecutive month in October, down 8.5% year-on-year to $6.3 billion, with overall outbound shipments falling 11.8% to $34.38 billion [3] - The U.S. imposed a 50% tariff on Indian goods since August, prompting New Delhi to reduce goods and services tax rates to stimulate domestic demand [4] - GST tax collections improved sharply in October to 1.95 trillion rupees ($21.7 billion), a 4.6% increase from the previous year, but growth slowed in November with collections of 1.7 trillion rupees, only a 0.7% increase [4] Group 3: Currency and Lending Environment - The Indian rupee has recently weakened against the dollar, crossing the 90-rupee-per-dollar mark [5] - Despite the policy rate cut earlier in the year, there has not been a significant increase in bank lending, indicating potential challenges in the lending environment [5]