RBI parks repo, bets on food crash and monsoon

Reserve Bank of India Governor Sanjay Malhotra held the benchmark repo rate steady at 5.5 percent on Wednesday while maintaining a neutral monetary policy position. The central bank upgraded its economic growth forecast to 6.8 percent from 6.5 percent based on strong domestic consumption and favorable monsoon conditions. Officials lowered their inflation projection to 2.6 percent for the 2025-26 fiscal year after food costs dropped sharply and goods and services tax reductions took effect. Malhotra said policymakers want time to assess how the earlier rate cuts, totaling 100 basis points since February, affect lending and economic activity before making further adjustments.