The Reserve Bank of India expects softer inflation and faster economic growth in the Indian economy, even as the rupee remains under pressure in the absence of a India-US trade deal.
The RBI has lowered its inflation forecast to 2.0% from 2.6% estimated earlier. At the same time, RBI has raised its GDP growth forecase to 7.3% for FY26 as against 6.8% eastimated earlier.
The Reserve Bank of India has cut the repo rate by 25 basis points to 5.25%, even as the monetary policy committee tries to balance India’s record-low inflation against a plunging rupee and 8%-plus GDP growth rate.
A majority of the 44 economists surveyed by Bloomberg expected the RBI to cut its benchmark repurchase rate by a quarter point to 5.25% on Friday, given inflation is well below the 4% target. But with the Indian economy expanding at a faster clip and the rupee dropping to a record low below 90 to the dollar, there were plenty of reasons for the RBI to pause as well—as forecast by Citigroup Inc., Standard Charted Plc and State Bank of India.
