The Reserve Bank of India’s decision to hold the policy repo rate at 5.5% was widely expected. After a front-loading of 100 basis points of rate cuts since February and a surge of liquidity injections, the central bank appears content to let past easing percolate through the economy. Yet the unchanged growth projections accompanying Wednesday’s review reveal more than stability. They underscore the limits of monetary accommodation in addressing deeper structural cracks.The RBI forecasts average GDP growth of 6.5% in 2025-26, underpinned by a strong monsoon, rising capacity use and supportive policy settings. Inflation, projected at 3.1% for the year, is expected to rise towards 4.4% by March, mirroring the current core inflation trend. This relatively benign outlook leaves space for one more cut later this year, but signals that the easing cycle is near its floor.
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