The Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 5.5%, amid rising global uncertainties and pressure on the Indian rupee caused by renewed tariff threats from US President Donald Trump. The decision was announced during the Monetary Policy Committee (MPC) meeting held on Wednesday.
Reserve Bank of India (RBI) Governor Sanjay Malhotra asserted that the Indian economy is performing exceptionally well and contributing more to global growth than the United States after recent comments by US President Donald Trump.
Speaking at the RBI headquarters in New Delhi on Wednesday, Malhotra stated, “We are contributing about 18% to global growth, which is more than the US contribution of around 11%. We are doing very well and will continue to improve further,” news agency PTI reported.
Malhotra’s statement comes as India braces for a GDP growth rate of 6.5% in 2025, compared to the International Monetary Fund’s global growth estimate of just 3%. He emphasized that India’s aspirational growth should exceed this 6.5% mark, citing a 7.8% average annual growth rate in recent years.
RBI Keeps Repo Rate Steady Amid Global Uncertainty
The Monetary Policy Committee (MPC) of the RBI, in a unanimous decision, kept the key repo rate unchanged at 5.50%. The central bank’s cautious stance comes amid rising trade tensions with the United States and Trump’s threats to raise tariffs on Indian goods due to India’s continued purchase of Russian crude oil.
Despite fears of a trade war, Malhotra downplayed concerns, saying:
“We don’t see a major impact of US tariffs on the Indian economy unless there is a retaliatory tariff. We are hopeful for an amicable solution.”
He added that India’s domestic demand, monsoon recovery, and rural consumption would help sustain growth in the coming quarters.
Trump’s Tariff Threats & Market Reaction
Tensions escalated after Trump announced plans to substantially raise duties on Indian goods, with tariffs increasing from 10% to 25%, effective Thursday. He also warned of additional penalties for India’s military and energy imports from Russia.
Trump’s controversial “dead economy” remark has drawn criticism from Indian political leaders and economists, who view the statement as inaccurate and politically motivated.
Stock Market Reacts to RBI Decision
Following the RBI’s rate hold, interest rate-sensitive sectors like auto, banking, and real estate saw a sharp decline:
- Bosch dropped by 4.85%
- Hyundai Motor India fell 1.95%
- HeroMoto Corp slid 1.31%
- Apollo Tyres dipped 1.07%
- Mahindra & Mahindra declined by 0.83%
Bright Outlook Despite Global Headwinds
Despite external pressures, Malhotra expressed confidence in India’s future:
“Global trade challenges remain, but the Indian economy holds bright prospects in the evolving world order. We’ve taken decisive, forward-looking measures to support growth.”
With a strong domestic foundation and proactive economic policy, India is expected to remain a key driver of global growth in the years ahead.
