Mumbai: The Reserve Bank of India (RBI) on Wednesday retained the GDP growth projection for the current fiscal year at 6.5 per cent, while lowering the inflation forecast to 3.1 per cent from 3.7 per cent.

Unveiling the third bi-monthly monetary policy for 2025-26, RBI Governor Sanjay Malhotra said the above normal southwest monsoon, lower inflation, rising capacity utilisation, and congenial financial conditions continue to support domestic economic activity. The supportive monetary, regulatory and fiscal policies, including robust government capital expenditure, should also boost demand. The services sector is expected to remain buoyant, with sustained growth in construction and trade in the coming months.

“Growth is robust and as per projections, though it is below our aspirations. The uncertainties of tariffs are still evolving. Monetary policy transmission is continuing. The impact of the 100 bps rate cut since February 2025 on the economy is still unfolding,” the Governor said.

He further said the domestic growth is holding up and is broadly evolving along the lines of assessment even though some high-frequency indicators showed mixed signals in May-June. Rural consumption remains resilient, while urban consumption revival, especially discretionary spending, is tepid, he said.