RBI holds interest rates for second time in a row
GST
Dated:- 1-10-2025
PTI
Mumbai, Oct 1 (PTI) Reserve Bank of India expectedly left its key interest rates unchanged on Wednesday as it waited for greater clarity on the impact of US tariffs as well as playout of earlier rate cuts and recent tax reductions.
RBI Governor Sanjay Malhotra, however, signalled scope for easing in the coming months to support the economy from any possible hit from US tariffs.
The six-member monetary policy committee voted unanimously to keep the repurchase rate unchanged at 5.5 per cent and decided to continue with a “neutral” policy stance, giving it flexibility to move in either direction if needed in future.
The rate-setting panel, headed by t
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50 per cent tariff on imports from India as well as the tightening of H1-B visa norms.
The rupee, Asia's worst-performing currency this year, rose 0.1 per cent to 88.70 per dollar, while stocks traded higher.
In holding interest rates, the RBI seems to be trying to balance competing priorities: subdued inflation and growth risks from US tariffs on one side, and the rupee's slide on the other.
Malhotra said the growth outlook remains resilient, supported by domestic drivers, despite weak external demand. “It is likely to get further support from a favourable monsoon, lower inflation, monetary easing and the salubrious impact of recent GST reforms.” Growth continues to be below aspirations.
The central bank raised its growth foreca
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rvices tax (GST) cuts, he said.
Consumer price inflation came in at 2.07 per cent in August.
Malhotra also announced measures to boost credit growth amidst easing foreign exchange rules, infra financing, new universal bank licensing draft, internationalisation of rupee, easing limits for lending against shares and other financial instruments.
Overall, the policy had a strong tilt to support growth via other measures while noting that rate cuts will happen down the road.
The MPC kept its policy stance neutral, although two external members – Nagesh Kumar and Ram Singh – saw reason to shift to an accommodative stance.
Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank, said in line with expectations, the MPC has delivered a dovis
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