RBI Holds Rates Amid Global Uncertainties Despite Inflation Room

Reserve Bank Governor Sanjay Malhotra announced retaining interest rates despite potential for cuts due to decreased inflation. Global uncertainties, GST impacts, and partial transmission of previous cuts informed the decision. The RBI aims for growth resilience with ongoing trade negotiations and an upward GDP growth revision.

The Reserve Bank of India (RBI) has opted to maintain interest rates, citing ongoing global uncertainties and incomplete transmission of previous monetary policies, Governor Sanjay Malhotra announced on Wednesday.

Despite a significant drop in inflation creating room for rate cuts, the central bank has decided to hold its stance. Malhotra noted the change in his statement's wording from 'limited space' to simply 'space' for rate reductions, indicating evolving considerations.

Key concerns include unresolved global economic issues, GST rationalization impacts, and potential US tariffs affecting sectors like textiles and pharmaceuticals. Nevertheless, the RBI revised its real GDP growth estimate upward for FY26 to 6.8%, reflecting optimism in India's domestic market resilience.

(With inputs from agencies.)