The central government kept the repo rate the same at 5.25% due to the ongoing tensions in West Asia, after the six-member monetary policy committee held a two-day meeting. Sanjay Malhotra, Central Bank Governor, said that to withstand geopolitical tensions and stabilize the economy in this ongoing Iran war, the rates are kept unchanged, but a weak monsoon might hit inflation.
Sanjay Malhotra highlighted that Core inflation is stable at 3.7 percent in March and April, and the Bank rate and MSF are at 5.5 percent; CPI inflation is estimated at 5.1 percent, while FDIs would show continued interest of foreign investors; crude oil has averaged $110 per barrel from April to May and India's forex is in a healthy position. So, considering all the factors, the CPI inflation is projected to be 5.1 percent in 2026.
RBI governor further said that as energy prices and supply shortages are major reasons that are impacting the Indian economy, and Indian manufacturing and domestic demand continue to expand, there are signs of moderation in a few sectors as the indicators point out.
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