In its latest monetary policy review, the Reserve Bank of India (RBI) decided to keep the benchmark repo rate unchanged at 6.50%, while adjusting the country’s economic growth forecast for the fiscal year downward.
This dual move underscores the central bank’s cautious approach amid global economic uncertainty and persistent inflationary pressures.
Why Did the RBI Maintain the Key Rate?
The decision to hold the repo rate steady marks the fifth consecutive policy review without a change. The RBI appears committed to balancing growth and inflation, noting that while price pressures have eased somewhat, they remain above comfort levels.
RBI Governor Shaktikanta Das emphasized that monetary policy would remain focused on achieving medium-term inflation targets of 4%, while ensuring economic stability. With global oil prices and geopolitical tensions adding to uncertainty, the central bank opted for prudence.
Growth Forecast Revised
The RBI revised its GDP growth projection for the current fiscal year from 6.5% to 6.3%. This adjustment reflects weaker-than-expected demand in some key sectors and external headwinds such as sluggish global trade and tightening financial conditions.
“While the domestic economy remains resilient, external factors such as a slowdown in global growth and geopolitical uncertainties weigh on our outlook,” Das said.
Impact on Inflation
Although retail inflation has softened compared to its peak earlier this year, food prices continue to be a concern. The RBI has reiterated its commitment to staying vigilant, with Governor Das highlighting the need for proactive measures should inflationary risks intensify.
Market Reaction
The RBI’s decision was largely in line with market expectations. The equity markets showed a muted reaction, while bond yields remained stable. Economists suggest that the RBI’s decision reflects a “wait-and-watch” approach, as the central bank assesses the evolving domestic and international economic landscape.
What This Means for Borrowers and Businesses
For borrowers, the unchanged repo rate means interest rates on loans and mortgages are unlikely to see significant changes in the near term. However, businesses may feel the pinch of slowing growth, particularly in sectors heavily dependent on global trade.
Looking Ahead
The RBI has signaled a data-driven approach moving forward, indicating that any policy action will be guided by evolving inflationary trends and global economic conditions. Analysts are watching closely for signs of whether the central bank will resume rate hikes in the coming months or maintain the status quo.
Conclusion
By keeping the key rate steady while lowering its growth forecast, the RBI has sent a clear message: stability and caution are the priorities in the current economic climate. As global uncertainties persist, the central bank’s focus on a balanced approach will be crucial in navigating the road ahead.
Stay tuned for more updates on India’s economic landscape and RBI policy insights.
FOR LATEST TREDING NEWS CLICK ON : https://inetfreak.com/admin
