Stable today (6.8.2025), its main interest rate its central bank Indiaat 5.5% in view of increasing duties threats by the president of USADonald Trump.
The move was in line with the expectations of economists who participated in a Reuters poll, and comes after an excessive reduction in the Central Bank of India (RBI) by 50 basis points in its last meeting in June, and comes at a time when the US is escalating its country.
RBI commander Sanjay Malhotra, in a monetary policy announcement, said the decision was unanimous. He noted that, while global trade challenges remain, geopolitical uncertainties have been “somewhat reduced”.
The Nifty 50 fell 0.18% after the decision, while the SENSEX index fell marginal. Rupia was marginally reinforced and traded to 87.72 against the dollar.
RBI’s latest move is coming as India is going through increasing tension with the US about its trade relations with Russia. On Monday, Trump criticized India for the purchase of Russian oil and weapons, threatening higher duties and an unspecified “penalty”.
While domestic development remains “durable”, the Central Bank noted that the prospects for external demand are still “uncertain amidst the ongoing duties and trade negotiations”.
“The winds that come from prolonged geopolitical tensions, ongoing global uncertainties and volatility in global financial markets poses risks to growth prospects.”
At the latest RBI meeting, Malhotra said there was limited margin for monetary policy to support growth due to a decrease by 50 basis points in June. As a result, RBI will change its attitude to “neutral” from “facilitating”.
This means that the Monetary Policy Committee, which is the basic RBI decision -making body, will carefully evaluate “incoming data and evolving prospects to chart the future course of monetary policy,” Malhotra said.
RBI also maintained its forecast for GDP growth for the financial year expiring in March 2026 to 6.5%, but reduced inflation to 3.1%, from its previous provision for 3.7%.
The latest measurement of India’s inflation still appears to support interest rates, with the overall inflation rate in June to be in a new low six years, at 2.1%.
RBI’s Monetary Policy Committee also said on Wednesday that short -term prospects of inflation have “become milder than expected earlier”, while inflation in 2025 is expected to remain significantly below the 4%central bank target.
In the meantime, the India economy expanded faster than the expected annual rate of 7.4% in the quarter ending in March, significantly higher than the growth of the 6.7% growth provided by economists in a Reuters poll.
This quarter signaled India’s 2024-25 financial year, which recorded a total economic growth of 6.5%, according to the government’s estimate.