US tariff turmoil: RBI MPC needs to gauge the effect of uncertainty

The challenge for the MPC is to gauge how this heightened level of uncertainty will affect growth and inflation dynamics in India, which will form the basis of its policy decision

The policy environment for the six-member monetary policy committee (MPC) of the Reserve Bank of India (RBI), meeting this week for the first time this financial year, has become enormously complex owing to global uncertainties. Last week, the United States imposed reciprocal tariffs on all trading partners. A 10 per cent base tariff now applies to all countries. Besides, it has imposed additional tariffs on countries with a higher trade surplus. Imports from India, for instance, will attract a tariff of 26 per cent. China has been slapped with a reciprocal tariff of 34 per cent, which, after including the