India Keeps Interest Rates Steady As Growth Outlook Brightens

(RTTNews) - The Reserve Bank of India decided to hold its benchmark rates on Friday, as economic growth momentum is expected to be sustained, with the signing of a trade deal with the EU and the progress made on US trade agreement.

At the meeting, the Monetary Policy Committee, governed by Sanjay Malhotra, unanimously decided to keep the policy repo rate unchanged at 5.25 percent. The MPC also voted to continue with the neutral stance. The RBI has reduced the repo rate by a cumulative 125 basis points in the current easing cycle that began in February 2025.

"Based on a comprehensive review of the domestic macroeconomic conditions and the outlook, the MPC is of the view that the current policy rate is appropriate," the bank said in a statement.

The MPC noted that external headwinds have intensified since the last meeting, though the successful completion of trade deals augurs well for the economic outlook. Overall, the near-term domestic inflation and growth outlook remain positive.

The bank raised its real growth outlook for FY26 to 7.4 percent from 7.3 percent. The bank expects economic activity to hold up well in 2026-27.

Real GDP growth projections for the first and the second quarters of fiscal year 2026-27 were revised upwards to 6.9 percent and 7.0 percent, respectively.

Policymakers observed that excluding precious metals, the underlying inflation pressures remain muted.

CPI inflation for 2025-26 was projected at 2.1 percent, slightly higher than the 2 percent estimate in December. The slight upward revision was primarily due to the rise in precious metal prices.