RBI Pauses Rate Cuts Amid Geopolitical Uncertainties

The RBI paused rate cuts amid global tensions, retaining the repo rate at 5.25% after December's reduction. Retail inflation was low, and GDP growth surpassed expectations. The decision follows historic low inflation and economic growth, although the rupee weakened, intensifying concerns about future inflation.

The Reserve Bank of India (RBI) decided not to further reduce policy rates in light of geopolitical uncertainties. This pause in adjustments comes after a series of cuts that saw the repo rate drop to 5.25% as of the last monetary policy review.

RBI Governor Sanjay Malhotra announced that the Monetary Policy Committee (MPC) maintained a neutral stance. The decision follows a four-month period where retail inflation remained below the government's 2% threshold, positioning itself as a reason to maintain current rates.

Amidst these developments, the Indian economy portrayed strength, with an 8.2% GDP growth in the second quarter, although the rupee's depreciation against the dollar raises inflationary concerns. As predicted by the government, the overall economic growth for this financial year is an estimated 7.4%.

(With inputs from agencies.)