New Delhi, August 5: The decision by the Reserve Bank of India (RBI) to maintain the repo rate without any changes has been widely welcomed by the business community and economists. Experts believe this move will strengthen business confidence and boost investment activities.
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) stated that maintaining stable interest rates is a positive signal for the business sector. This decision is expected to enhance business confidence, support investments, and sustain India’s economic growth amidst global uncertainties.
ASSOCHAM President Nirmal K. Minda remarked that the RBI’s decision reflects confidence in the strong macroeconomic foundations of the Indian economy. According to him, stability in policy interest rates will encourage investment and help maintain economic growth while providing flexibility to respond to changes in global conditions.
He stated, “Keeping policy rates unchanged signals that the RBI is adopting a balanced approach to promote growth, control inflation, and maintain financial stability.”
ASSOCHAM also welcomed the RBI’s upward revision of the GDP growth forecast to 6.7 percent, noting that it aligns closely with its own estimate of nearly 7 percent.
Madhavi Arora, Chief Economist at MK Global Financial Services, described the RBI’s monetary policy as “cautious yet positive.” She mentioned that the central bank is attempting to balance the strength of the domestic economy and positive foreign currency inflows while considering ongoing tensions in the Middle East, tightening global financial conditions, and risks associated with El Niño.
Arora pointed out that despite inflation rates being lower than the RBI’s estimates in the first quarter, the Monetary Policy Committee (MPC) has maintained its focus on risks related to El Niño. She explained that the RBI believes any future price pressures will primarily stem from supply-side issues unless they broadly impact inflation.
Meanwhile, Dr. Madan Sabnavis, Chief Economist at Bank of Baroda, noted that the RBI’s decision was supported by a 10 basis point increase in the GDP growth forecast and a 10 basis point decrease in the inflation estimate. He indicated that the projections of high growth and low inflation favored maintaining the status quo.
He stated, “The RBI’s statement clearly indicates that various economic indicators remain strong, instilling confidence that economic growth will remain steady in the coming times.”
However, Dr. Sabnavis also warned that inflationary pressures could rise in the second half of the current fiscal year and the first quarter of FY 2027-28. Therefore, the possibility of an interest rate hike by the end of 2026 cannot be entirely ruled out.
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