Title Rewrite: Investing.com reports that RBI maintains stable interest rates and raises GDP forecast

Investing.com– On Friday, The Reserve Bank of India held interest rates steady as anticipated, but marginally increased its annual growth prediction for the Indian economy due to continuous strength in consumption.

This happens to be the seventh consecutive meeting where the RBI has maintained its rates at 6.5%, after hinting at the termination of its rate hike cycle in 2023. 

However, the bank has shown no significant signs of planning to start easing policy in the near future. RBI Governor Shaktikanta Das has asserted that the bank will persist with the withdrawal of policy support until the consumer price index is sustainably reduced to 4%. 

The rate has seen a steep drop in the previous year, but has encountered some opposition this year in achieving the RBI’s 4% target. 

Das has held the RBI’s annual CPI inflation outlook in the range of 4% to 4.5%. 

Food prices have continued to be the major hurdle for overall inflation.

The RBI Governor stated that even if the U.S. Federal Reserve and other significant central banks were considering easing policy this year, the RBI doesn’t have any immediate plans to do the same. 

RBI increases 2025 GDP outlook 

Despite high rates and persistent inflation, the RBI marginally uplifted its annual GDP forecast for the current fiscal year, attributing to strong consumer spending and urban consumption. 

The Real GDP growth for the current fiscal year is now anticipated to be 7.2%, as opposed to the previous forecast of 7%. 

The forecast showed a fourth consecutive year of over 7% GDP for the Indian economy, which has been benefiting from a post-COVID surge. The nation has become the fastest-growing major economy in the last three years.

Nonetheless, certain uncertainties regarding the Indian economy emerged in the Indian markets this week, after the BJP-led NDA alliance secured a lesser majority than projected in the 2024 general elections.

This has raised questions about whether Prime Minister Narendra Modi will be able to continue implementing comprehensive economic reforms with minimal opposition.