India’s central bank kept its policy rate unchanged as U.S. tariff policy continued to weigh on the South Asian economy’s outlook.
The Reserve Bank of India on Wednesday voted unanimously to maintain its policy repo rate at 5.50%, standing pat for the second time in a row after delivering a jumbo cut in June.
The RBI also voted to keep its monetary policy stance at neutral.
Wednesday’s decision was expected to be a close call: Eight of 13 economists surveyed by The Wall Street Journal had expected the central bank to stay on hold, while five forecast a cut.
The RBI met against a backdrop of easing inflation at home, continued rupee weakness and the overhang of 50% U.S. tariffs on India’s exports.
The impact of new U.S. tariffs on some pharmaceutical products announced by the Trump administration remains unclear. The duty is set to take effect Wednesday.
“Significant development on the domestic front amidst a fast-changing global economic landscape have altered the narrative on growth-inflation dynamics in India,” while tariffs are expected to affect exports, RBI Gov. Sanjay Malhotra said.
Write to Kimberley Kao at [email protected]