New Delhi, June 5: The Reserve Bank of India’s (RBI) decision to keep the policy repo rate unchanged is focused on maintaining financial stability, which will bolster long-term economic growth prospects. This was stated by economists and industry experts on Friday.
Dr. Ranjit Mehta, CEO and Secretary General of the PHD Chamber of Commerce and Industry (PHDCCI), noted that this monetary policy decision reflects a balanced approach considering the risks facing the economy.
He mentioned that while global uncertainties have increased, the RBI’s move has created a favorable environment to sustain medium and long-term growth prospects.
Rajeev Juneja, President of PHDCCI, remarked that inflation remains around the RBI’s target of 4 percent. However, geopolitical risks are disrupting global supply chains, which could impact GDP growth prospects for the fiscal year 2026-27.
Despite this, he emphasized that strong domestic demand keeps the Indian economy resilient and robust.
Experts also warned that supply shocks, high energy prices, and a weaker-than-normal monsoon could hinder economic growth momentum.
Madan Sabnavis, Chief Economist at Bank of Baroda, projected that if inflation approaches 5.9 percent, interest rates may rise by the end of this year.
He stated, “We foresee one to two interest rate hikes this year. The monsoon may have an impact, though it has been somewhat balanced for now.”
Sabnavis further noted that the RBI’s extensive measures to enhance foreign currency inflows through foreign portfolio investment, external commercial borrowing, and non-resident deposits have been positively surprising.
He added that the foreign exchange market reacted positively to these announcements. It remains to be seen if this will change the investment direction of foreign portfolio investors in the debt market.
Additionally, Binod Kumar, Managing Director and CEO of Indian Bank, welcomed the measures taken to stabilize the rupee.
He commented, “Amid geopolitical crises, the Indian economy has shown remarkable strength and has successfully faced global challenges. The RBI’s decision to maintain interest rates reflects its focus on economic growth.”
Kumar also mentioned that demand in retail, agriculture, and micro, small, and medium enterprises (MSMEs) will continue to rise as policies aimed at improving economic conditions are implemented.
He concluded that this policy further strengthens confidence in the fundamental robustness of the Indian economy.
Tribhuwan Atharva, Managing Director and CEO of LIC Housing Finance, stated that a stable interest rate environment will support demand in the housing sector.
He noted that maintaining the current interest rate structure will boost borrower confidence, improve loan flows, and strengthen housing demand across various markets.
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