Business
RBI Holds Repo Rate Steady, Focuses on Inflation and Growth
The Reserve Bank of India (RBI) Governor, Shaktikanta Das, recently announced that the central bank has decided to keep the benchmark repo rate unchanged at 6.5%. This marks the third bi-monthly monetary policy announcement for the financial year 2025.
The decision comes as a majority of the Monetary Policy Committee (MPC) voted 4 to 2 in favor of maintaining the current rate. The RBI also reaffirmed its real GDP growth estimates for FY25 at a solid 7.2%, while keeping the Consumer Price Index (CPI) inflation forecast at 4.5%.
Das emphasized the importance of vigilance in response to the rising food prices, which continue to be a concern amidst global economic uncertainties. Despite these pressures, he noted that India’s economic growth remains resilient.
In a notable move, RBI has increased the frequency of credit reporting to credit information companies from once a month to every two weeks, aiming to enhance the credit information ecosystem within the country. Rajesh Kumar from TransUnion CIBIL praised this as a progressive step that will benefit lending decisions.
Market reactions to the RBI’s announcement have been relatively muted, with no immediate expectations of rate cuts. Investment experts suggest that if food inflation stabilizes in the coming months, the RBI may shift its stance in future meetings, particularly in October.
Shaktikanta Das participated in a live press conference after the policy announcement where he discussed several measures to strengthen financial systems. He described the current state of India’s foreign exchange reserves, which recently hit a record high of $675 billion.
The financial markets appeared to digest the news with minor fluctuations, with indices such as Nifty and Bank Nifty showing slight declines in early trading post-announcement.
Experts foresee a changing landscape for monetary policy as global markets remain volatile. The RBI remains focused on ensuring inflation aligns closer to its target while supporting economic growth.
