RBI’s Monetary Policy Committee (MPC) left the policy rate unchanged and maintained the stance at neutral, in line with our expectations. With global tariff-related uncertainties still unfolding and impacts of monetary policy actions and recent fiscal stimulus still playing out, the central bank has opted to wait and watch. Importantly, it has clearly conveyed that it could go for a policy rate cut in the future if growth headwinds intensify.

The RBI Governor’s statement aptly highlights that the growth-inflation dynamics have changed since the last policy meeting in August. There is a higher threat on the growth front as India faces steep US tariffs of 50 per cent. With goods exports already reeling under tariff pressure, the recent announcement by the US of higher H-1B visa fees and the proposed HIRE Act (Halting International Relocation of Employment), which seeks to curb outsourcing by US companies, reflects likely risks to India’s services exports. While the global concerns have aggravated, there are some supporting factors for domestic demand. The recent rationalisation of GST rates, reduction in income tax burden, a good monsoon, benign inflation and lower interest rates are supportive factors for growth.

The RBI has revised upwards the GDP growth projection for FY26 to 6.8 per cent (from earlier projection of 6.5 per cent). This is mainly because of estimated sharp GDP growth in........

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