RBI Maintains Repo Rate At 5.5% Amid Rupee Pressure And Tariff Uncertainties

New Delhi, Aug 6 (KNN) The Reserve Bank of India has maintained its benchmark repo rate at 5.5 percent following the conclusion of its bi-monthly Monetary Policy Committee meeting.

The decision comes as the Indian rupee continues to face downward pressure, with the currency declining 16 paise following fresh tariff threats issued by US President Donald Trump targeting Indian goods.

RBI Governor Sanjay Malhotra announced the decision during the MPC meeting held to formulate the central bank's monetary policy strategy.

The committee, which convenes every two months, opted to maintain a neutral policy stance amid evolving global uncertainties. In June, the RBI had reduced the key lending rate by 50 basis points in response to moderating inflationary pressures.

Governor Malhotra cited ongoing uncertainty surrounding tariff policies and the current monetary policy transmission process as key factors influencing the decision. He emphasised that the MPC would continue monitoring emerging economic data closely.

The central bank chief noted that external demand prospects remain uncertain due to ongoing tariff announcements and trade negotiations, while prolonged geopolitical tensions continue to pose risks to the growth outlook.

Despite global headwinds, the RBI has projected India's real GDP growth at 6.5 percent for the current fiscal year, maintaining an optimistic growth trajectory.

The quarterly growth projections show 6.5 percent in the first quarter, 6.7 percent in the second quarter, 6.6 percent in the third quarter, and 6.3 percent in the fourth quarter.

Governor Malhotra assured that the central bank has implemented decisive, forward-looking measures to support economic growth.

Addressing geopolitical challenges, the RBI Governor observed that while global uncertainties have somewhat diminished, international trade challenges persist.

He noted that despite India's favourable medium-term economic prospects, policymakers worldwide are contending with subdued growth and declining inflation rates.

On the inflation front, the RBI reported that headline inflation has decreased due to volatile food prices, though projections indicate an uptick in the final quarter of the fiscal year.

Governor Malhotra stated that the inflation outlook for the current fiscal year has become more favourable than anticipated in June, with retail inflation expected to rise above 4 percent during the January-March quarter.

Core inflation experienced a slight increase in June, primarily attributed to rising gold prices, and is projected to remain moderately above 4 percent throughout the year.

(KNN Bureau)