Women (silhouetted) walk past Reserve Bank of India (RBI) logo displayed at Global Fin Fest exhibition in Mumbai.Sopa Images | Lightrocket | Getty ImagesIndia's central bank kept its policy rate steady at 5.5% Wednesday in the face of rising tariff threats from U.S.
President Donald Trump.The move was in line with expectations from economists polled by Reuters, and comes after the Reserve Bank of India dered an outsized cut of 50 basis points at its last meeting in June.During its last meeting, RBI Governor Sanjay Malhotra said that given the 50-basis-point cut, there was limited room for monetary policy to support growth, and as such, the RBI would switch its stance to "neutral" from "accommodative."This means that the Monetary Policy Committee, which is the RBI's key decision-making body, will carefully assess the "incoming data and the evolving outlook to chart out the future course of monetary policy," Malhotra said.Analysts at Bank of America said in a July 28 note that the RBI "took away the punchbowl from the " by dering an early, aggressive cut.
They expect the central bank to pause for now, and further policy support will only be deployed if there is a major shift in the macroeconomic outlook.However, the BofA analysts left the door open for a possible rate cut later this year — ly in the fourth quarter of 2025 — once the GDP growth outlook becomes er.India's inflation reading still looks supportive for a rate cut, with the headline inflation rate in June hitting a fresh six-year low of 2.1%.Meanwhile, India's economy expanded at a faster-than-expected annual rate of 7.4% in the quarter March, sharply higher than the 6.7% growth forecast by economists in a Reuters poll.
That quarter marked the end of India's 2024-25 fiscal year, which registered an overall economic growth of 6.5%, in line with the government's estimate.The RBI's move comes as India navigates rising tensions with the U.S.
over its trade ties with Russia.
On Monday, Trump criticized India for purchasing Russian oil and weapons, threatening higher tariffs and an unspecified "penalty."— This is news, please check back for .