Will RBI Maintain Repo Rate Amid Growth Concerns and Low Inflation?
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Synopsis
In a pivotal moment for the Indian economy, the RBI is poised to keep the repo rate at 5.50 percent. This decision comes amidst low inflation and emerging growth risks, raising questions about the future economic landscape. Dive into the factors influencing this critical monetary policy decision.
Key Takeaways
- The RBI is expected to maintain the repo rate at 5.50 percent.
- Inflation remains low at 2.07 percent, well below the RBI’s target.
- Global risks may impact India’s growth outlook.
- Government expenditure supports economic growth despite weak private investment.
- RBI's liquidity measures aim to promote economic activity.
New Delhi, Sep 29 (NationPress) The Reserve Bank of India (RBI) is anticipated to keep the repo rate steady at 5.50 percent during its forthcoming Monetary Policy Committee (MPC) assembly, according to a fresh report released on Monday.
The central bank previously reduced the repo rate by 50 basis points in June, with the August evaluation resulting in the rate remaining unchanged, as per insights from Bajaj Broking.
The report suggests that the RBI is likely to uphold the existing rate, given that inflation remains low and manageable, while growth risks are increasingly evident.
India’s consumer price inflation saw a slight uptick to 2.07 percent in August, rising from 1.61 percent in July, thus ending a ten-month trend of moderation.
Even with this increase, inflation is still significantly below the RBI’s target of 4 percent and remains within the acceptable range.
Economists have noted that the surge in food prices is a primary factor, but adjustments in Goods and Services Tax (GST) rates could assist in lowering retail prices in the upcoming months.
In terms of economic growth, the Indian economy achieved a strong 7.8 percent year-on-year (YoY) growth in the June quarter, exceeding expectations, as per the report.
This growth was mainly bolstered by government spending, although private investment continues to lag.
However, the report cautioned that global challenges, including US trade tariffs and geopolitical tensions, might exert pressure on India’s growth outlook in the near future.
Additionally, the report underscored the RBI’s recent liquidity initiatives, such as the Cash Reserve Ratio (CRR) reduction in September, aimed at promoting credit flow and bolstering economic activity.
Nonetheless, borrowing costs remain relatively high, particularly for both central and state governments.
Looking ahead, the central bank is expected to adopt a neutral stance in its guidance. The RBI will likely aim to balance its commitment to fostering economic growth with the necessity of maintaining price stability, the report concluded.
Point of View
I believe it's essential to stay informed about the RBI's decisions, as they directly impact our economy and daily lives. The balance between supporting growth and maintaining price stability is crucial for sustaining India's economic health. We must remain vigilant and adapt to these changes as a nation.
NationPress
29/09/2025
Frequently Asked Questions
What is the current repo rate set by RBI?
The current repo rate set by RBI is 5.50 percent.
Why is RBI likely to keep the repo rate unchanged?
RBI is expected to maintain the repo rate due to low inflation and emerging growth risks.
How did inflation change in August?
Inflation rose slightly to 2.07 percent in August from 1.61 percent in July.
What factors are affecting India's economic growth?
Global challenges like US trade tariffs and geopolitical tensions are affecting India's growth outlook.
What measures has RBI taken to support the economy?
RBI has implemented liquidity measures, including a Cash Reserve Ratio (CRR) cut, to enhance credit flow.
