RBI Holds Rate Steady at 5.50% as India's Economy Grows 7.8%
The Reserve Bank of India (RBI) maintained its key repo rate at 5.50% on Wednesday, as India's economy surged ahead with a 7.8% growth in the April-June quarter. Inflation, meanwhile, remained close to the lower end of the RBI's tolerance band at 2.07% in August.
The RBI's rate-setting panel, led by Governor Sanjay Malhotra, voted unanimously to keep the rate unchanged. The panel also decided to stick with a 'neutral' policy stance. This move comes as the central bank evaluates the impact of earlier rate cuts and recent tax reductions, despite global trade uncertainties.
The RBI expects inflation in the current financial year to come in at 2.6%. This projection aligns with the recent acceleration in annual inflation to 2.07% in August, which remains close to the lower end of the RBI's 2%-6% tolerance band. The Indian economy's robust growth, at 7.8% in the April-June quarter, also factored into the RBI's decision to keep rates steady.
The RBI's GDP growth forecast for the current year has been raised to 6.8%, reflecting the country's economic resilience. With inflation under control and the economy expanding, the RBI will continue to monitor global trade uncertainties and domestic economic indicators to determine future monetary policy moves.
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