RBI Could Cut Interest Rates Further If India–US Trade Deal Is Delayed, Says Goldman Sachs

Mumbai: India’s economy remains on a strong footing, but continued uncertainty over the India–US trade deal could prompt the Reserve Bank of India (RBI) to consider further interest rate cuts, according to global brokerage Goldman Sachs.

Trade delay may create growth pressure

Goldman Sachs said that if trade-related challenges continue beyond the first quarter of FY27 and begin to affect economic growth, the RBI may use its remaining policy space to support the economy through additional monetary easing.

The brokerage expects the India–US trade agreement to be finalised by early FY27. However, if talks are delayed into the second half of the financial year, it could act as a headwind for growth.

Consumption recovery still uneven

Goldman Sachs noted that India’s mass consumption recovery, especially in rural areas and among lower-income households in cities, is still at an early stage.

This recovery is being supported by a good crop cycle, higher state government cash transfers to women, and GST cuts that benefited lower-income groups. These measures are helping demand slowly improve, even as global uncertainties remain.

Mixed picture across income groups

Santanu Sengupta, Chief India Economist at Goldman Sachs, said consumption trends are uneven across income levels. While middle- and high-income consumers saw strong growth after the Covid-19 pandemic, their spending is now beginning to slow.

The middle-income group, in particular, is facing pressure due to job market concerns and the growing impact of artificial intelligence on employment patterns.

Government support helped growth

On the policy side, the central government eased its fiscal consolidation in FY26 and focused more on supporting consumption. This included income tax relief and cuts in consumption taxes, which helped boost spending.

As a result, India recorded a strong real GDP growth of 7.6 per cent year-on-year in calendar year 2025.

Low inflation impacts nominal growth

However, Goldman Sachs pointed out that nominal GDP growth fell to a six-year low, excluding the pandemic years. This was mainly due to very low inflation, which reduced the overall value of economic output despite strong real growth.