Goldman Sachs sees RBI's monetary policy as a hawkish hold
This story was originally published at 20:15 IST on 6 August 2025
Register to read our real-time news.Informist, Wednesday, Aug. 6, 2025
MUMBAI – The Reserve Bank of India's monetary policy statement Wednesday that left the key policy repo rate unchanged is a "hawkish pause", Goldman Sachs said in a note. The investment bank said it continues to expect a cut of 25 bps in the key repo rate in the last quarter of the current financial year, which it had forecast after US President Donald Trump levied a 25% reciprocal tariff on India.
The tariff would drag down India's growth, Goldman said. The investment bank had recently lowered its forecast for India's real GDP growth for 2025-26 (Apr-Mar) to 6.1% from 6.20%, mainly because of the imposition of tariffs and uncertainties about these. In April, the RBI had also cut its estimate for real GDP growth for FY26 to 6.5% from 6.7% earlier.
The investment bank highlighted two risks to a rate cut by the RBI. One is "a rapid and mutually beneficial resolution" of the US-India trade negotiations and the other is "a quicker-than-expected rise in core inflation (excluding petrol, diesel, gold, and silver) towards 4.0%."
If either of these two events occur, the RBI would keep interest rates on hold and would rely on liquidity infusion from the phased 1% reduction in the cash reserve ratio for banks it had announced in June, Goldman said.
The investment bank said it had recently raised its current account deficit forecast for India by 0.1% of GDP to 0.9% of GDP for 2025. The deficit could increase further if the US were to levy additional tariffs on India, as Trump has threatened this week. End
Reported by Rati Chaphekar
Edited by Deepshikha Bhardwaj
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (22) 6985-4000 /+91 (11) 4220-1000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2025. All rights reserved.
To read more please subscribe
Share this Story:
