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RBI Holds Rates Steady: Growth Up, Inflation Down
6 Aug
Summary
- Repo rate unchanged at 5.25%, growth FY27 raised to 6.7%.
- Inflation forecast lowered to 5% for FY27.
- RBI to issue revised norms on loan interest rates.
The Reserve Bank of India (RBI) decided to keep the repo rate at 5.25% during its latest monetary policy committee meeting. This marks the fourth consecutive review where the rate has remained unchanged. The committee also maintained a neutral stance, allowing flexibility in response to economic data.
Projections for the fiscal year 2027 show an upward revision in growth to 6.7%, while the inflation forecast has been lowered to 5%. RBI Governor Sanjay Malhotra emphasized the economy's resilience and muted underlying inflation pressures. He expressed confidence in India's ability to navigate global uncertainties.
Further regulatory developments include the upcoming issuance of revised norms for interest rates on loans, aiming to standardize pricing practices. Additionally, the RBI will recommence issuing licenses for urban cooperative banks after a nearly two-decade hiatus.
The central bank noted robust foreign currency inflows, including approximately $36 billion under the 'at par' FCNR deposit swap window, strengthening India's external position. Governor Malhotra assured that any short-term rupee liquidity arising from dollar swaps would be absorbed through normal economic channels.
