Reserve Bank of India Maintains Interest Rates

Investing.com—The Reserve Bank of India kept interest rates unchanged at 6.5% for the eighth consecutive meeting, as anticipated. The bank reiterated its commitment to withdrawing accommodative policy to address inflation concerns.

GDP Outlook

The central bank slightly reduced its gross domestic product outlook for the current quarter to 7.1%, down from 7.5%. However, the GDP growth projection for the fiscal year remains at 7.2%.

Inflation Insights

Governor Shaktikanta Das noted the unexpected rise in India’s consumer price index inflation to 5.1% in June, driven largely by food prices, while fuel costs declined and services inflation eased. The RBI anticipates inflation to decrease in the third quarter, estimating it to end the year between 4% and 4.5%.

Das emphasized that there are no immediate plans for loosening policy, which contrasts with recent dovish signals from the Federal Reserve. He also addressed the rupee’s strength, stating it has remained relatively stable amid recent fluctuations.

Market Reaction

Despite the strong growth forecasts and sustained interest from foreign investors, Indian stock benchmarks fell by about 0.5% each following the RBI meeting, alongside a slight weakening of the rupee.