RBI sees room for rate cut with riders

Mumbai

Reserve Bank of India (RBI) expectedly left its key interest rates unchanged on Wednesday as it waited for greater clarity on the impact of US tariffs as well as playout of earlier rate cuts and recent tax reductions.

RBI Governor Sanjay Malhotra, however, signalled scope for easing in the coming months to support the economy from any possible hit from US tariffs. The six-member monetary policy committee voted unanimously to keep the repurchase rate unchanged at 5.5 per cent and decided to continue with a ‘neutral’ policy stance, giving it flexibility to move in either direction if needed in future. The rate-setting panel, headed by the central bank governor and comprising half of external experts, had cut interest rates by a total of 100 basis points this year before hitting a pause at its previous bimonthly meeting in August.

Announcing the decisions of the MPC, Malhotra said: “It was ‘prudent’ to hold rates for the impact of policy actions to play out and greater clarity to emerge before charting the next course. The current macroeconomic conditions and the outlook have opened up policy space for further supporting growth.”

“However, the MPC noted that the impact of the front-loaded monetary policy actions and the recent fiscal measures is still playing out.”

Also, the trade-related uncertainties are unfolding, he said, referring to the US imposing a 50 per cent tariff on imports from India as well as the tightening of H1-B visa norms.