The Reserve Bank of India has kept the benchmark repo rate unchanged at 5.25%, choosing to wait for greater clarity on inflation and international energy prices before changing borrowing costs.
All six members of the Monetary Policy Committee voted to retain the rate. The committee also maintained its “neutral” policy stance, leaving the RBI free to respond in either direction if economic conditions change.
The central bank raised its economic growth forecast for the current financial year to 6.7% from 6.6%. At the same time, it lowered its average retail-inflation projection to 5% from 5.1%.
The forecast for core inflation, which excludes food and fuel, was reduced from 4.7% to 4.3%.
What It Means for Borrowers
The decision means that loans linked directly to the repo rate are unlikely to see an immediate policy-driven change. However, individual banks can still revise lending and deposit rates depending on funding costs and market conditions.
RBI Governor Sanjay Malhotra said higher fuel prices had pushed headline inflation above the central bank’s target, while broader price pressures remained contained.
The RBI identified crude-oil prices, geopolitical developments, trade uncertainty and monsoon performance as important risks.
India’s foreign-exchange reserves, meanwhile, increased by approximately $10.5 billion to $692.9 billion in the week ended July 31. The larger reserve position gives the RBI more capacity to manage excessive volatility in the rupee.
The central bank has not committed to either a rate cut or an increase at its next meeting. Future decisions will depend on inflation, growth and global financial conditions.
RBI Keeps Repo Rate at 5.25%, Raises India Growth Forecast
Digital desk
The Reserve Bank of India has kept the benchmark repo rate unchanged at 5.25%, choosing to wait for greater clarity on inflation and international energy prices before changing borrowing costs.
All six members of the Monetary Policy Committee voted to retain the rate. The committee also maintained its “neutral” policy stance, leaving the RBI free to respond in either direction if economic conditions change.
The central bank raised its economic growth forecast for the current financial year to 6.7% from 6.6%. At the same time, it lowered its average retail-inflation projection to 5% from 5.1%.
The forecast for core inflation, which excludes food and fuel, was reduced from 4.7% to 4.3%.
What It Means for Borrowers
The decision means that loans linked directly to the repo rate are unlikely to see an immediate policy-driven change. However, individual banks can still revise lending and deposit rates depending on funding costs and market conditions.
RBI Governor Sanjay Malhotra said higher fuel prices had pushed headline inflation above the central bank’s target, while broader price pressures remained contained.
The RBI identified crude-oil prices, geopolitical developments, trade uncertainty and monsoon performance as important risks.
India’s foreign-exchange reserves, meanwhile, increased by approximately $10.5 billion to $692.9 billion in the week ended July 31. The larger reserve position gives the RBI more capacity to manage excessive volatility in the rupee.
The central bank has not committed to either a rate cut or an increase at its next meeting. Future decisions will depend on inflation, growth and global financial conditions.
