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Informist, Wednesday, Aug. 6, 2025

 

MUMBAI - Dhiraj Nim and Sanjay Mathur, economists, ANZ Bank, said the following on the Reserve Bank of India's third bi-monthly monetary policy for 2025-26 (Apr-Mar) detailed on Wednesday:

 

The monetary policy committee kept the policy repo rate unchanged at 5.50%, contrary to our expectations. The decision was based on inflation above 4% for one year ahead and confidence in growth of 6.5% for fiscal year ending March 2026, according to projections of the Reserve Bank of India. Additionally, the RBI opted to wait and assess the progress of the transmission of rate cuts delivered so far.

 

The RBI lowered its FY26 CPI inflation forecasts materially, citing base effects and volatile food prices as the primary reasons. We think inflation could undershoot the RBI's revised projections but is unlikely to drive further easing. The burden of proof will be on growth.

 

We expect a challenging external environment, high US tariffs, and weakening domestic activity indicators will result in growth below the forecast, testing the RBI's confidence. Incoming activity data will be important to monitor. We are retaining a 25-basis-point rate cut in our forecast trajectory for now, pushing it to October.  End

 

Compiled by Ketaki Patil
Filed by Deepshikha Bhardwaj 

 

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