Barclays Bank economists have put forward an interesting point: the 25% tariff imposed by the U.S. on India is unlikely to force the Indian central bank to cut interest rates. This situation is quite subtle—although the tariff hammer has been swung, it seems the Indians have no intention of easily bowing down.

Looking closely at this tariff figure reveals why. India's current tariff rates are already higher than those of neighboring countries, and it is just one percentage point lower than the 26% punitive tariff hinted at by the U.S. in April. Barclays analysts believe that during the monetary policy meeting this week, the Indian central bank will most likely choose a "dovish pause"—meaning they will verbally express readiness to support the economy but will actually remain inactive.

There is a key point here: the Indian government is clearly betting on a breakthrough in trade negotiations. They are calculating that as long as they can negotiate a few more rounds at the negotiating table, they might be able to secure a reduction in U.S. tariffs. Therefore, rushing to cut interest rates would instead seem to lack confidence. Several members of the monetary policy committee have privately stated recently that they cannot allow the tariff issue to throw them into chaos.

However, the pressure is indeed real. Indian exporters are already crying out for help, especially those companies that have a large proportion of exports to the U.S. But the Barclays report points out that India's economic fundamentals are relatively sound, inflation is within controllable limits, and there is no need to rush to adjust monetary policy due to tariff issues.

Ironically, the market seems to have anticipated this outcome long ago. The rupee exchange rate has been unusually stable in recent days, showing no signs of panic fluctuations. It appears that everyone is well aware that this U.S.-India tariff tug-of-war will continue, and the Indian central bank will not surrender so quickly.