RBI Likely To Keep Repo Rate At 5.25%, Easing Geopolitical Risks Support Wait-And-Watch Policy
· Free Press Journal
New Delhi: The Reserve Bank of India (RBI) is likely to keep the repo rate unchanged at 5.25 percentin its upcoming monetary policy meetings, according to a report by BofA Securities.
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The central bank is expected to continue with a cautious and data-based approach instead of making quick policy changes. Analysts believe RBI will prefer to wait for more economic signals before taking any major step on interest rates.
Easing Global Tensions Offer Relief
The report said easing geopolitical tensions, especially after the US-Iran peace agreement, have reduced a major global risk.
Why Did RBI Keep Repo Rate At 5.25% Despite Oil & Rupee Risks, Know- What Is The Central Bank Watching Next?Lower uncertainty in global markets gives RBI more flexibility to focus on domestic economic conditions rather than reacting to short-term external shocks.
Earlier, rising tensions had created concerns about higher crude oil prices, which could increase inflation. But with tensions easing, pressure from global energy markets has reduced for now.
RBI To Monitor Key Economic Factors
RBI is expected to closely watch several important factors before changing its policy stance.
These include the progress of the monsoon, food inflation and crude oil prices. All three play a major role in determining inflation trends in India.
RBI MPC Decision Due Friday, Economists Expect Repo Rate Hold At 5.25% Amid Inflation ConcernsA weak monsoon can affect crop output and push food prices higher, while rising oil prices can increase transportation and input costs across sectors.
Growth Slows, Inflation Risks Rise
At the June Monetary Policy Committee (MPC) meeting, RBI had unanimously decided to keep the repo rate unchanged at 5.25 percent and maintained a neutral stance.
The central bank also revised its economic forecasts. It lowered India’s FY27 GDP growth forecast to 6.6 percent, down by 30 basis points. At the same time, it raised the inflation estimate by 50 basis points to 5.1 percent.
RBI Holds Repo Rate At 5.25% Amid Global Risks, Industry Sees Stability, Confidence Boost & Steady Credit FlowData-Dependent Approach To Continue
The MPC minutes showed policymakers remain concerned about inflation risks and a volatile global environment.
However, members also noted that core inflation remains under control and there are no major signs of broad-based price pressure.
This suggests RBI is likely to continue with its wait-and-watch strategy in the coming months.