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The Reserve Bank of India (RBI) maintained its policy rate at 5.5% today. It aligns with forecasts as policymakers assess the impact of previous rate cuts and tax reductions realized amid global trade uncertainty. The decision was unanimous by the Central Bank’s six-member Monetary Policy Committee (MPC). RBI Governor Sanjay Malhotra revealed that the MPC considered it prudent to maintain the current level, allowing time for the effects of earlier moves to filter through the economy. The RBI had previously reduced the rate by 100 basis points in the first half of 2025. The RBI revealed that the steps are expected to boost domestic demand. RBI revises GDP estimates from 6.5% to 6.8% The Central Bank of India revised its growth outlook upwards, projecting the GDP will grow by 6.8% from the previous estimate of 6.5%. The country’s economy grew by 7.8% in the second quarter of 2025, exceeding expectations. The RBI maintained its projections for the 2026 fiscal year at 6.5%, citing concerns about slowing global trade and U.S. tariffs weighing on external demand, despite a currently balanced outlook. The inflation forecast was revised downward, with the Central Bank projecting a Consumer Price Index (CPI) inflation rate of 2.6% for the 2025 fiscal year. The previous estimates placed the CPI for inflation at 3.1%. The RBI also revised down the inflation rate for the 2026 fiscal year from 3.7% to 3.1%. Governor Malhotra revealed that the outlook had turned more harmless due to easing food prices and tax reductions. August Inflation stood at 2.07% close to the lower end of the 2% to 6% tolerance band. While inflation pressures had eased, some economists had expected the RBI to announce further reductions in October. Sonal Varma, Chief economist at Nomura Research, told CNBC that the rate cut in October would…

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Filed under: News - @ October 1, 2025 10:26 am