<p>New Delhi: The Reserve Bank of India (RBI) on Wednesday decided to keep key policy interest rates unchanged saying the impact of the 100 basis points rate cut since February on the economy is still unfolding and there is lack of data to predict the effect of the US tariff hike on the country’s GDP growth.</p><p>The central bank’s rate setting panel Monetary Policy Committee (MPC) unanimously voted to keep the repo rate unchanged at 5.5 per cent. It was lowered by 25 basis points each in February and April and by 50 basis points in June. The repo rate (repurchase rate) is the interest rate at which the central bank lends money to commercial banks.</p><p>The standing deposit facility (SDF) rate under the liquidity adjustment facility has been kept unchanged at 5.25 per centwhile the marginal standing facility (MSF) rate and the bank rate also remains steady at 5.75 per cent. These policy rates guide the lending and deposit rates offered by the commercial banks and other financial institutions. Given the status quo on policy rates, the equated monthly installment (EMI) on home, auto and other loans would also remain steady.</p>.RBI retains FY26 growth at 6.5%; lowers inflation forecast to 3.1%.<p>The MPC also decided to maintain the monetary policy stance at “neutral”. This means the RBI may raise or lower policy interest rates in October depending on the prevailing economic conditions.</p><p>Some analysts had pitched for rate cuts to shield the economy from the negative impact of the US tariff hike.</p><p>While RBI Governor Sanjay Malhotra admitted the challenges to the economy from the global uncertainties, he cited lack of data to predict the impact. “We will maintain a very, very close vigil on the incoming data and take a call. As of now we do not have sufficient data to revise our GDP forecasts,” Malhotra said at the post-Monetary Policy Committee (MPC) press conference.</p><p>Reacting to US President Donald Trump’s ‘dead economy’ comment about India, the RBI Governor said the Indian economy is doing very well and contributing more to global growth than the US.</p><p>“We are contributing about 18 per cent (of global growth), which is more than the US where the contribution is expected to be much less -- about 11 per cent or something. We are doing very well and we will continue to improve further,” Malhotra said.</p><p>SBI Research, which had pitched for a 25 bps cut in repo rate, dubbed the RBI’s Wednesday’s action as a “technical pause”. “We believe that if RBI inflation projections for FY26 may remain correct then 5.5 per cent repo rate may be the terminal rate,” SBI Group Chief Economic Adviser Soumya Kanti Ghosh said in a note.</p><p>The central bank kept its projection on India’s GDP growth for the current financial year unchanged at 6.5 per cent. For April-June quarter the growth is pegged at 6.5 per cent; Q2 at 6.7 per cent, Q3 at 6.6 per cent; and Q4 at 6.3 per cent. “The headwinds emanating from prolonged geopolitical tensions, persisting global uncertainties, and volatility in global financial markets pose risks to the growth outlook,” the RBI noted in the monetary policy statement. </p><p>However, the RBI revised downward its inflation projections citing easing food prices on the back of favourable monsoon. Projection for the headline CPI inflation for 2025-26 has been lowered to 3.1 per centfrom the earlier projection of 3.7 per cent announced in June.</p><p>CPI headline inflation declined for the eighth consecutive month to a 77-month low of 2.1 per cent in June, as per the latest official data. This was driven primarily by a sharp decline in food inflation led by improved agricultural activity and various supply side measures. Food inflation recorded its first negative print since February 2019 at (-) 0.2 per cent in June. “Inflation is projected to go up from the last quarter of this financial year,” Malhotra said.</p><p>“With inflation likely to trend higher post the near term favourable trends, the bar for rate cuts ahead is set very high. We can see some room for the last leg of easing only if growth momentum slows significantly,” said Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank.</p>
<p>New Delhi: The Reserve Bank of India (RBI) on Wednesday decided to keep key policy interest rates unchanged saying the impact of the 100 basis points rate cut since February on the economy is still unfolding and there is lack of data to predict the effect of the US tariff hike on the country’s GDP growth.</p><p>The central bank’s rate setting panel Monetary Policy Committee (MPC) unanimously voted to keep the repo rate unchanged at 5.5 per cent. It was lowered by 25 basis points each in February and April and by 50 basis points in June. The repo rate (repurchase rate) is the interest rate at which the central bank lends money to commercial banks.</p><p>The standing deposit facility (SDF) rate under the liquidity adjustment facility has been kept unchanged at 5.25 per centwhile the marginal standing facility (MSF) rate and the bank rate also remains steady at 5.75 per cent. These policy rates guide the lending and deposit rates offered by the commercial banks and other financial institutions. Given the status quo on policy rates, the equated monthly installment (EMI) on home, auto and other loans would also remain steady.</p>.RBI retains FY26 growth at 6.5%; lowers inflation forecast to 3.1%.<p>The MPC also decided to maintain the monetary policy stance at “neutral”. This means the RBI may raise or lower policy interest rates in October depending on the prevailing economic conditions.</p><p>Some analysts had pitched for rate cuts to shield the economy from the negative impact of the US tariff hike.</p><p>While RBI Governor Sanjay Malhotra admitted the challenges to the economy from the global uncertainties, he cited lack of data to predict the impact. “We will maintain a very, very close vigil on the incoming data and take a call. As of now we do not have sufficient data to revise our GDP forecasts,” Malhotra said at the post-Monetary Policy Committee (MPC) press conference.</p><p>Reacting to US President Donald Trump’s ‘dead economy’ comment about India, the RBI Governor said the Indian economy is doing very well and contributing more to global growth than the US.</p><p>“We are contributing about 18 per cent (of global growth), which is more than the US where the contribution is expected to be much less -- about 11 per cent or something. We are doing very well and we will continue to improve further,” Malhotra said.</p><p>SBI Research, which had pitched for a 25 bps cut in repo rate, dubbed the RBI’s Wednesday’s action as a “technical pause”. “We believe that if RBI inflation projections for FY26 may remain correct then 5.5 per cent repo rate may be the terminal rate,” SBI Group Chief Economic Adviser Soumya Kanti Ghosh said in a note.</p><p>The central bank kept its projection on India’s GDP growth for the current financial year unchanged at 6.5 per cent. For April-June quarter the growth is pegged at 6.5 per cent; Q2 at 6.7 per cent, Q3 at 6.6 per cent; and Q4 at 6.3 per cent. “The headwinds emanating from prolonged geopolitical tensions, persisting global uncertainties, and volatility in global financial markets pose risks to the growth outlook,” the RBI noted in the monetary policy statement. </p><p>However, the RBI revised downward its inflation projections citing easing food prices on the back of favourable monsoon. Projection for the headline CPI inflation for 2025-26 has been lowered to 3.1 per centfrom the earlier projection of 3.7 per cent announced in June.</p><p>CPI headline inflation declined for the eighth consecutive month to a 77-month low of 2.1 per cent in June, as per the latest official data. This was driven primarily by a sharp decline in food inflation led by improved agricultural activity and various supply side measures. Food inflation recorded its first negative print since February 2019 at (-) 0.2 per cent in June. “Inflation is projected to go up from the last quarter of this financial year,” Malhotra said.</p><p>“With inflation likely to trend higher post the near term favourable trends, the bar for rate cuts ahead is set very high. We can see some room for the last leg of easing only if growth momentum slows significantly,” said Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank.</p>