The Reserve Bank of India (RBI) today said the recent 25-basis-point repo rate hike could moderate bank credit growth, which is currently above 18 per cent, but is unlikely to have a significant impact on overall economic expansion.
RBI Governor Sanjay Malhotra said credit growth is expected to remain strong and continue supporting economic activity, adding that minor fluctuations in its pace would not materially affect the economy.
The RBI has shifted its policy stance to calibrated tightening and indicated that rate cuts are unlikely in the near term. Malhotra said monetary policy decisions would primarily be guided by domestic growth and inflation conditions, while global developments would also be taken into account.
The Governor said the renewed escalation of the West Asia conflict, volatile crude oil prices, rising bond yields in advanced economies and an appreciating US dollar have weakened global economic sentiment and increased financial market volatility. He said global growth is expected to slow in 2026 despite remaining resilient, while higher energy and food prices are likely to push up inflation and prompt further monetary policy tightening by major central banks.
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