FX.co ★ India Holds Rates, Revises Up FY25/26 GDP Forecast

The Reserve Bank of India (RBI), during its October meeting, upheld its key repo rate at 5.50%, aligning with general market expectations. This rate continues to be the lowest since August 2022. The decision emerges as inflation pressures ease, despite rising concerns due to the recent U.S. imposition of 50% tariffs on Indian exports and increased visa fees, which stoke fears of wider punitive actions impacting the services trade. Notably, since the beginning of the year, the RBI has implemented a cumulative rate cut of 100 basis points. Regarding the economic outlook, the central bank adjusted its GDP growth forecast for the fiscal year 2025/26 upward to 6.8%, from the earlier projection of 6.5%. Simultaneously, projections for headline inflation have been revised down to 2.6% from 3.1%, remaining well within the RBI's targeted range of 2–6%. At the same time, core inflation is reported at 4.2%.