Reserve Bank of India, under Governor Sanjay Malhotra, kept the repo rate unchanged at 5.25% but adopted a cautious tone on the economy. India’s FY27 GDP growth forecast was cut to 6.6% from 6.9%, while inflation projection was raised to 5.1% from 4.6%. The RBI cited global uncertainties, high crude oil prices, supply chain disruptions, and weak monsoon risks as key challenges.
Malhotra stressed that domestic demand remains resilient, but external shocks and weather patterns could weigh on growth. Inflation risks are tilted upwards, requiring vigilance. The monetary policy stance continues to focus on withdrawal of accommodation, aiming to bring inflation closer to the 4% target while supporting growth.
The RBI highlighted that India’s financial system is stable, credit growth is healthy, and foreign exchange reserves are comfortable. However, geopolitical tensions and volatile commodity markets could challenge macroeconomic stability. The central bank reiterated its readiness to act if inflationary pressures intensify, but for now prefers a wait‑and‑watch approach.
Overall, the message was clear: growth momentum is slowing, inflationary pressures are rising, and policy caution is essential. The RBI seeks to balance stability with flexibility, keeping India’s economy prepared for global shocks and domestic uncertainties.
