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Repo Rate Pause Likely to Boost Business Sentiment, Economists Say
The Reserve Bank of India is the country's central bank, and it sets a special interest rate called the repo rate.
This rate affects how much banks pay when they borrow money.
This week, the RBI decided to keep the repo rate the same instead of raising or lowering it.
Many business leaders and economists were happy about this decision.
They say steady rates make businesses feel more confident about borrowing and investing.
The RBI also said it expects India's economy to grow a bit faster, by 6.7 percent.
Economists still see some worries, like conflicts in the Middle East and weather changes from El Niño.
The prices of everyday goods might also stay high later this year and into next year.
If that happens, the RBI might raise the rate near the end of 2026.
For now, the message is: rates stay steady and the economy keeps growing.
The Reserve Bank of India kept the benchmark repo rate unchanged on Wednesday, a move broadly welcomed by industry bodies and economists.
ASSOCHAM said the pause supports interest-rate stability, which should boost business confidence, investment, and India's growth momentum.
The RBI revised its GDP growth forecast upward to 6.7 percent, close to ASSOCHAM's own projection of 7 percent.
Economists called the policy tone 'cautious albeit constructive,' balancing risks from the Middle East conflict, tighter global financial conditions, and El Niño.
Bank of Baroda's chief economist warned inflation could remain elevated, with a possible rate hike toward the end of CY2026.
- Who
- The RBI's Monetary Policy Committee made the decision; economists Madhavi Arora (Emkay Global), Dr. Madan Sabnavis (Bank of Baroda), Nirmal K. Minda (ASSOCHAM President), and industry bodies responded.
- What
- The RBI kept the benchmark repo rate unchanged and revised its GDP growth forecast up to 6.7 percent while cutting the inflation forecast by 10 basis points.
- Where
- India; the responses were reported from New Delhi.
- When
- Wednesday (exact date not specified in the article).
- Why
- To support interest-rate stability and business confidence, sustain growth momentum, and keep flexibility to respond to global developments and inflation risks.
Key facts
- Decision
- Benchmark repo rate kept unchanged
- GDP growth forecast
- Revised upward to 6.7 percent (raised by 10 basis points)
- Inflation forecast
- Cut by 10 basis points
- ASSOCHAM's growth projection
- 7 percent
- Key risks cited
- Middle East conflict, tighter global financial conditions, El Niño
- Possible future action
- Rate hike possible toward end of CY2026
- Commentators
- ASSOCHAM, Emkay Global Financial Services, Bank of Baroda
Quotes
Dr. Madan Sabnavis
Chief Economist at Bank of Baroda
“probably towards the end of CY2026”
thehansindia.com
“cautious albeit constructive”
thehansindia.com
Nirmal K. Minda
President of ASSOCHAM
“while providing the necessary flexibility to respond to evolving global developments.”
thehansindia.com









