Reserve Bank of India holds repo rate at 6.5%

The Reserve Bank of India left its key repo rate unchanged at 6.5% for a ninth straight policy meeting in August, in line with market expectations, to allow inflation to move down toward its 4% medium-term target.

Annual CPI inflation in the country was reported at 5.08% in June, a four-month high, driven by a surge in food prices.

The RBI also maintained its economic growth forecast for the fiscal year 2025 at 7.2%, while its inflation forecast was kept at 4.5%.

“The RBI expectedly kept rates and stance unchanged, with the unambiguous focus being retained on inflation. With growth remaining robust the MPC still has room to hold on to policy stance to get confirmation on the disinflationary trend,” Upasna Bhardwaj, chief economist at Kotak Mahindra Bank, was quoted as saying by Reuters.

“We continue to expect scope for change in stance in the October policy with rate cuts beginning from December. The prospects of simultaneous change in stance and rate cuts could increase depending on how domestic inflation and global environment transitions.”

The Indian Rupee was 0.10% weaker on the day against the US Dollar, with the USD/INR currency pair last trading at 83.9475.