MUMBAI, Feb 6: The Reserve Bank of India kept its benchmark interest rate unchanged on Friday, as expected, as inflation remained at manageable levels and growth concerns eased following increased Government spending in the Budget and reduced tariff pressures after a trade deal with the United States. The central bank’s six-member Monetary Policy
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Committee (MPC) voted unanimously to keep the repurchase or repo rate at 5.25 per cent. RBI retained its neutral policy stance, signalling that it is likely to remain on hold for now. US President Donald Trump earlier this week announced a cut in tariffs on Indian goods to 18 per cent from 50 per cent, easing a key pressure point on India’s economy and markets. Announcing the decisions of the MPC, RBI Governor Sanjay Malhotra said external headwinds have intensified, but the successful completion of the trade deal with the United States bodes well for the economy. The RBI has cut rates by a total of 125 basis points since February 2025, marking its most aggressive easing cycle since 2019. It reduced rates by 25 basis points at its previous meeting in December. While inflation remains benign, economic activity remains resilient. “Amidst heightened geo-political tensions and elevated uncertainty, the Indian economy is in a good spot with strong growth and low inflation. Inflation remains below the tolerance band and its outlook continues to be benign,” he said. “With the signing of a landmark trade deal with the European Union and the US trade agreement in sight, growth momentum is likely to be sustained for a longer period.” Inflation is expected to average close to 2 per cent in the current financial year, below the central bank’s target of 4 per cent. GDP growth for the current fiscal year ending March 31 is forecast at 7.4 per cent. The RBI raised real GDP growth projections for the first two quarters of the next fiscal to 6.9 per cent (April-June) and 7 per cent (July-September) but deferred full-year projection to April as the new GDP series will be released later this month. Announcing additional measures, Malhotra said RBI will issue three draft guidelines relating to mis-selling, recovery of loans and engagement of recovery agents, and on limiting liability of customers in un-authorised electronic banking transactions. “It is also proposed to introduce a framework to compensate customers up to an amount of Rs 25,000 for loss incurred in small-value fraudulent transactions,” he said.
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