Mumbai (maharashtra), June 5: The Reserve Bank of India (RBI) on Friday kept the benchmark repo rate unchanged at 5.25 per cent, opting for a status quo amid growing global economic uncertainties and geopolitical tensions.
Announcing the decision of the Monetary Policy Committee (MPC), RBI Governor Sanjay Malhotra said the Indian economy remains resilient despite an increasingly turbulent global environment.
"The Indian economy entered this phase of global turbulence with much stronger fundamentals, and we are confident that it will withstand these shocks with minimum pain," Malhotra said.
He added that the central bank was confronted with difficult trade-offs, prompting monetary policy to adopt a more cautious stance.
The RBI's decision comes against the backdrop of escalating geopolitical tensions in West Asia, which the Governor said continue to cloud the global economic outlook. Rising energy prices and persistent disruptions in global supply chains are weighing on economic activity across regions.
Malhotra noted that major central banks in advanced economies are likely to shift towards tighter monetary policy as inflationary pressures re-emerge. While global equity markets remain buoyant, supported by optimism surrounding artificial intelligence-led growth, bond markets continue to reflect concerns over inflation and debt sustainability.
"The global economic outlook remains clouded by the continuing geopolitical impasse in West Asia. Sharply escalating energy prices and global supply chain disruptions continue to hinder economic activity," he said.
The RBI Governor also highlighted increased volatility in global currency markets.
According to him, changing investor sentiment and a flight to safe-haven assets have exerted pressure on foreign exchange markets, resulting in a depreciating trend across many emerging market economy (EME) currencies.
The MPC's decision to hold rates steady signals the central bank's focus on balancing domestic growth considerations with external risks, while closely monitoring inflation dynamics and global financial conditions.
With India's macroeconomic fundamentals remaining relatively robust, the RBI has indicated that it will continue to assess evolving global developments before making any changes to its monetary policy stance.
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