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RBI Holds Rates, Keeps Neutral Stance Amid Inflation Risks
The Reserve Bank of India is like the country's big money manager.
It has a group called the Monetary Policy Committee that decides how much it costs people and businesses to borrow money.
In August, this group decided not to change borrowing costs and said it would keep watching carefully.
Prices of food and fuel have been going up, which is called inflation.
Inflation rose from 2.7 percent to 4.4 percent since the start of the year.
The bank expects inflation to stay around 5 percent over the next year.
At the same time, the bank is happy because India's economy is growing well, so it raised its growth prediction a little to 6.7 percent.
India is also selling more goods to other countries.
But the bank is watching for problems like changing oil prices, poor rain, and troubles in other parts of the world.
The RBI Monetary Policy Committee left the policy rate unchanged and retained its neutral stance at its August meeting.
CPI inflation rose steadily to 4.4% in June from 2.7% at the beginning of the year, driven mainly by higher food and fuel prices.
The RBI marginally lowered its average FY27 CPI projection to 5% while raising its FY27 GDP growth projection to 6.7%.
India's goods exports picked up by 16% in Q1 FY27, with non-petroleum exports growing 13%.
Key risks flagged include the West Asia crisis, US tariff threats, volatile global crude oil prices, and a weak monsoon.
- Who
- The Reserve Bank of India's Monetary Policy Committee (RBI MPC).
- What
- Held the policy rate unchanged, retained a neutral stance, lowered the FY27 CPI inflation projection to 5%, and raised the FY27 GDP growth projection to 6.7%.
- Where
- India.
- When
- At its August monetary policy meeting.
- Why
- To remain growth-supportive while supply-side inflationary pressures have not yet become broad-based.
Key facts
- Policy stance
- Neutral, with the policy rate left unchanged
- CPI inflation (June)
- 4.4%, up from 2.7% at the start of the year
- Core inflation (excl. precious metals)
- 2.4%
- FY27 CPI inflation projection
- 5% (marginally lowered)
- FY27 GDP growth projection
- 6.7% (marginally raised)
- Q1 FY27 goods export growth
- 16% overall; 13% excluding petroleum products
- Current account deficit forecast
- Comfortable at around 1% of GDP in FY27
- Key risks
- West Asia crisis, US tariff threats, weak monsoon, volatile crude oil prices
Sources
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