Economists and industry experts said on Wednesday said that amid a major demand push after the reduction in the GST rates, the RBI has adopted a cautious approach of holding the repo rate at 5.5 per cent.
“It will also help navigate the global uncertainties and choppy waters. With low inflation and steady policies, corporates can plan their finances carefully and invest wisely,” said Srinivasan Vaidyanathan, Operating Partner, Essar Capital.
“While this stance provides short-term stability, it highlights the necessity for more assertive policy measures to invigorate demand and investment, ensuring sustainable economic growth,” Vaidyanathan added.
The Central Bank has also raised its projection of India’s GDP growth rate to 6.8 per cent for 2025-26 from 6.5 per cent earlier, as the implementation of several growth-inducing structural reforms, including streamlining of GST, is expected to offset some of the adverse effects of the external headwinds.
According to a note by Axis Securities, the recent GST rate rationalisation comes at an opportune time and is expected to support consumption demand during the festive season.
“The regulator has revised its growth forecast upwards for Q2 and FY26, while a marginal downward revision is seen in H2FY26 onwards. However, inflationary pressures are expected to continue to ease in the near term. The pause in the current meeting leaves room for the RBI to opt for a 25bps rate cut in the forthcoming meeting, with growth buoyancy continuing and expectations of softening inflationary pressures,” according to the note.
According to Aditi Gupta, economist, Bank of Baroda, RBI’s projections on growth and inflation suggest that there might be room for further policy easing, although the magnitude will be limited.
“We expect the terminal repo rate at 5.25 per cent; however, the timing of the next rate cut will be crucial,” Gupta added.
The RBI Governor also listed a number of regulatory announcements aimed at regulatory compliance, improving flow of credit, foreign exchange management, customer protection and financial markets.
(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)
