Amid rising tensions with the US due to the tariff hike by President Donald Trump and added uncertainties globally, the Reserve Bank of India (RBI) on Wednesday kept the repo rate unchanged at 5.50%.
The Central Bank's six-member Monetary Policy Committee (MPC) opted to hold the repurchase rate steady after a 50-basis point cut in June (the third since February), which led to the move by the RBI.
While addressing a press conference on the monetary policy statement in Mumbai on Wednesday, RBI Governor Sanjay Malhotra stated concerns over Donald Trump's continuous threats to raise tariffs on Indian imports for purchasing Russian crude oil.
He said, "We don't see a major impact of US tariffs on the Indian economy unless there is a retaliatory tariff. We are hopeful that we will have an amicable situation."
Further, Malhotra agreed to the global uncertainties with the evolving trade landscape, but expressed confidence in India's economy. He said, "Global trade challenges remain, but the Indian economy holds bright prospects in the changing world order. We have taken decisive and forward-looking measures to support growth."
In the coming quarters, it is expected that India's robust domestic demand, above-average rains forecasted, and ongoing recovery in agriculture and rural consumption will benefit the GDP.
In the meanwhile, interest-rate sensitive auto, realty, and bank stocks declined on Wednesday as RBI kept the repo rate unchanged.
The tensions intensified due to Trump's rhetoric of "substantially" increasing the tariff rates on India, after already increasing tariff rates from 10% to 25%. He had even warned of an additional penalty if India continued purchasing Russian crude oil and military equipment.
He had even called India a dead economy while commenting on India and Russia's trade ties.