Daijiworld Media Network - New Delhi
New Delhi, Sep 29: The Reserve Bank of India (RBI) is expected to keep the repo rate unchanged at 5.50% during its upcoming Monetary Policy Committee (MPC) meeting, according to a report released Monday by Bajaj Broking. After a 50 basis point cut in June, the RBI held rates steady in August and is now widely anticipated to maintain the status quo as it navigates a delicate balance between low inflation and emerging risks to economic growth.
India’s consumer price inflation (CPI) saw a slight rise to 2.07% in August, up from 1.61% in July, breaking a ten-month streak of moderation. However, inflation still remains well below the RBI’s 4% target and comfortably within its tolerance band. Economists attribute the recent uptick mainly to rising food prices, although some relief may come from rationalised GST rates, which could ease retail price pressures in the coming months.
While inflation remains manageable, the report highlights growing concerns on the growth front. The Indian economy expanded by a strong 7.8% year-on-year in Q1 (June quarter), driven largely by government spending, but private investment continues to underperform. Analysts caution that this momentum may be tested in the months ahead, particularly with global uncertainties such as US trade policies and geopolitical tensions looming large.
The report also points to the RBI’s recent liquidity-supportive actions, including a Cash Reserve Ratio (CRR) cut in September, aimed at improving credit availability and stimulating economic activity. Yet, borrowing costs remain relatively elevated for both the central and state governments, which may constrain their fiscal space going forward.
Given this backdrop, the RBI is expected to maintain a neutral tone in its forward guidance—signaling continued vigilance on inflation while remaining supportive of growth. As the global and domestic macroeconomic landscape evolves, the central bank's balancing act between price stability and economic expansion will remain key in the months ahead.