Why did the Reserve Bank of India keep its policy rate unchanged?

The Reserve Bank of India kept its policy repo rate at 5.25% because the Indian economy is experiencing strong growth with low inflation, and recent trade deals with the U.S. and European Union have eased economic headwinds.

What impact did the U.S.-India trade deal have on India's economy?

The U.S.-India trade deal helped reduce tariffs on Indian goods, eased investor concerns, and is expected to sustain India's economic growth momentum.

How did the RBI adjust its economic forecasts?

The RBI revised its growth forecast upwards for the fiscal year ending March 2027 and slightly increased its consumer inflation outlook for the same period.

Home / Business and Economy / India Holds Rates Amid Trade Deal Boost

India Holds Rates Amid Trade Deal Boost

6 Feb

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Summary

RBI unanimously held the policy repo rate at 5.25%.
A trade deal with the U.S. and EU reduced economic headwinds.
Economic growth forecast revised up, inflation outlook slightly higher.

The Reserve Bank of India has decided to keep its policy repo rate unchanged at 5.25%, pausing its easing cycle after a rate cut in December. The monetary policy committee voted unanimously to maintain this stance, citing the Indian economy's robust growth and controlled inflation amidst global geopolitical tensions. Governor Sanjay Malhotra highlighted that the current policy rate is deemed appropriate.

The RBI's decision comes as a significant trade deal with the European Union has been finalized, and a trade agreement with the U.S. is anticipated. These developments are expected to sustain the economy's growth momentum. The U.S. has agreed to reduce tariffs on Indian goods, easing investor concerns.

Consequently, the RBI has revised its growth forecast upwards for the first two quarters of the fiscal year ending March 2027. However, the consumer inflation outlook for the same period has been slightly raised due to geopolitical uncertainty and volatile energy prices. Experts suggest that with key growth risks abating and inflation expected to return to target, further rate cuts are unlikely in the near future.