The latest tariffs on the world’s fourth largest economy by US President Donald Trump did not seem to faze the Reserve Bank of India, with the RBI Governor Sanjay Malhotra announcing that there would not be any cut in the policy repo rate, keeping it at 5.5 per cent. India’s central bank also retained the GDP growth forecast for the current fiscal year at 6.5 per cent, stating that the risk was “evenly balanced” despite geopolitical tensions posing headwinds.
“It is the people of India, including those at the very bottom of the pyramid, who are our raison d'être, our reason for being,” reminded the RBI chief, backing the tone of the recent stance of India against US strongarming.
“For us at RBI, the interest and welfare of citizens of India is foremost,” came the assurance from Malhotra, in a micdropworthy conclusion to this edition of the monetary policy committee announcement.
The MPC decided to continue with a neutral stance, the RBI Governor said, adding that the Monsoon was progressing well, bringing buoyancy in the economy.
RBI also declared that India had system liquidity in surplus, and lowered inflation projections to 3.1 per cent during FY26 from June estimates of 3.7 per cent. “Core inflation has remained steady as expected at 4 per cent,” said Malhotra.
Another marked announcement was the RBI looking at steps to standardise claim settlement in respect of accounts and articles kept in bank lockers.
Despite policy watchers expecting another 25 basis point cut this time, the RBI governor said that the impact of the 100 bps rate cut in June was “still unfolding”.
The latest RBI announcement also proved some commentators wrong who felt that Donald Trump’s tariff announcement, combined with the benign inflation rate, could push the RBI for another repo rate cut.