Reserve Bank of India (RBI) expectedly left key interest rates unchanged on Wednesday as it waited for clarity on the impact of US tariffs as well as the playout of rate cuts and tax reductions.
RBI Governor Sanjay Malhotra, however, signalled scope for easing in the coming months to support the economy from any possible hit from US tariffs. The six-member monetary policy committee voted unanimously to keep the repurchase rate unchanged at 5.5 per cent and decided to continue with a “neutral” policy stance, giving it flexibility to move in either direction if needed in future.
The rate-setting panel, headed by the RBI Governor and comprising half of external experts, had cut interest rates by a total of 100 basis points this year before hitting a pause at its previous bimonthly meeting in August.
“It was prudent to hold rates for the impact of policy actions to play out and greater clarity to emerge before charting the next course. Current macroeconomic conditions and outlook have opened up policy space for further supporting growth,” Malhotra said.
Also, the trade-related uncertainties are unfolding, he said, referring to the US imposing a 50 per cent tariff on imports from India as well as the tightening of H1-B visa norms. The rupee, Asia’s worst-performing currency this year, rose 0.1 per cent to 88.70 per dollar, while stocks traded higher.