Policymakers must balance rising prices due to tariffs & currency depreciation: RBI Bulletin

The Reserve Bank of India has said that the policymakers are now walking a tightrope, having to balance the upward strain of rising prices on account of tariffs and currency depreciation, as well as the downward pressure on inflation from economic slowdown, according to its bulletin.

"Policymakers are now walking a tightrope, having to balance the upward strain of rising prices on account of tariffs and currency depreciation, as well as the downward pressure on inflation from economic slowdown," according to the document.

"The resilience of the global economy is being tested by escalating trade tensions and a heightened wave of uncertainty around the scope, timing, and intensity of tariffs. While engendering heightened volatility in global financial markets, these have also caused apprehensions about the slowdown in global growth," the bulletin said.


Indian economy continues to demonstrate resilience as evident in the robust performance of the agriculture sector and improving consumption despite escalating trade tensions, the RBI March Bulletin said on Wednesday. The resilience of the global economy is being tested by escalating trade tensions and a heightened wave of uncertainty around the scope, timing, and intensity of tariffs, said an article on 'State of the Economy' published in the Bulletin.

While engendering heightened volatility in global financial markets, these have also caused apprehensions about the slowdown in global growth, it said.

"Amidst these challenges, the Indian economy continues to demonstrate resilience as evident in the robust performance of the agriculture sector and improving consumption," it said.

The reverberations of a tumultuous external environment, however, are being reflected in sustained foreign portfolio outflows, said the authors.

The article further said India's macroeconomic strength to face these challenges is bolstered by a decline in headline CPI inflation to a seven-month low of 3.6 per cent in February 2025 on account of a further correction in food prices.