India, Brazil Central Banks Warn Economic Risks From US Tariffs

The Reserve Bank of India maintained its key lending rate at 5.5%, with Governor Sanjay Malhotra warning that escalating US tariff policies pose significant risks to India's economic growth, though domestic fundamentals remain strong. Despite these external challenges, India’s GDP growth forecast remains optimistic at 6.5% for the fiscal year 2025-26, supported by favorable monsoon conditions and government spending. Similarly, Brazil's central bank is adopting a cautious monetary policy stance amid the impact of new 50% US tariffs on Brazilian imports, highlighting significant sectoral effects and uncertainty about broader macroeconomic outcomes. Brazil’s central bank kept the benchmark Selic rate steady at 15%, emphasizing the need for a contractionary monetary policy to curb inflation and reanchor inflation expectations amid ongoing US trade tensions. Both central banks are closely monitoring the evolving trade dynamics and their implications on inflation, growth, and financial markets. The US tariffs have triggered uncertainty and cautious investor sentiment in both countries, reinforcing the challenge of balancing growth and inflation control.