AFP – India’s central bank kept interest rates unchanged for the eighth time in a row on yesterday, as inflation risks continue to linger in the world’s fifth-largest economy.
The Reserve Bank of India (RBI) said its benchmark repo rate, the level at which it lends to commercial banks, would remain steady at 6.50 per cent.
Two major central banks have started bringing down interest rates, including the European Central Bank which on Thursday cut rates for the first time since 2019. Inflation in India has cooled from its 2022 peak of 7.8 per cent but still remains above the RBI’s four per cent target.
RBI governor Shaktikanta Das said the bank “remains vigilant to any upside risks” of inflation, particularly from food prices.
The decision comes days after Prime Minister Narendra Modi’s Bharatiya Janata Party failed to secure an outright majority in the national elections, forcing it to depend on coalition partners to govern.
Experts believe that may force Modi’s next administration to resort to populist spending to shore up its support base and mollify allies, which could stoke inflation.
