The Reserve Bank of India left its policy repo rate unchanged at 5.25 percent and retained a neutral stance at the Monetary Policy Committee meeting, while revising its GDP growth projection down to 6.6 percent and raising the retail inflation forecast to 5.1 percent, and announced five measures aimed at attracting dollar inflows.
KEY DECISIONS
The MPC voted unanimously for the hold. It cut its FY27 growth projection to 6.6 percent from 6.9 percent and raised its retail inflation projection by 50 basis points to 5.1 percent, citing factors including rising energy and commodity prices, the impact of the West Asia conflict on crude oil markets and uncertainty over the south-west monsoon.
Alongside the core interest-rate decision the RBI outlined a package of five measures described as intended to attract dollar flows. The measures included the RBI bearing the full foreign-exchange hedging cost for banks raising fresh three- to five-year FCNR(B) deposits until 30 September 2026, a concessional FX swap facility for external commercial borrowings by public sector undertakings, and the addition of 15-, 30- and 40-year government securities to the Fully Accessible Route.
Analysts estimated that the measures could draw about $40 billion of inflows, Reuters reported.
Sources: Reserve Bank of India; BusinessLine; Reuters
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