RBI keeps Repurchase Rate unchanged at 5.25%, as expected, with the decision unanimous and it maintains a neutral stance
Says:
- Standing Deposit Facility rate remains unchanged at 5%, whilst the Marginal Standing Facility rate and the Bank Rate are also retained at 5.5%.
- Safe-haven flows have exerted depreciation pressures on currencies of major economies.
- Global growth faces downside risk.
- India’s economy is on a stronger footing at the current juncture.
- The global economy is facing unprecedented challenges, and before the outbreak of the West Asia conflict, India’s macro fundamentals exuded confidence.
- Upside risk to inflation outlook has risen.
- High-frequency indicators up to February suggest a continuation of strong momentum in economic activity.
- West Asia conflict likely to impede growth.
- Momentum in services sector is to support economic activity and business expectations remain optimistic.
- Raises FY25/26 GDP growth forecasts to 7.6% from 7.4%, while it sees FY26/27 growth at 6.9%.
- Sees FY26/27 CPI at 4.6%.
Context
The RBI's decision to keep the repurchase rate unchanged at 5.25% was expected and reflects a unanimous stance, indicating stability in its monetary policy amidst global uncertainties. While there are rising inflation risks and downside threats to global growth, the RBI remains optimistic about India's economic momentum, upgrading GDP growth forecasts for FY25/26. This suggests mixed implications for rates and economic sentiment, aligning with a neutral outlook while acknowledging upward pressures on inflation.
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