India's Central Bank Holds Benchmark Rate at 6.50% Amid Inflation

Expectedly, India's central bank maintained the benchmark interest rate at 6.50%, attempting to keep increasing inflation under control without impeding growth in the third-largest economy in Asia.

Shaktikanta Das, the governor of the Reserve Bank of India, said that the domestic economy's decline had "bottomed out" in the September quarter and that the central bank had lowered its forecast for India's GDP growth in fiscal year 2025 from 7.2% growth in October to 6.6% growth.

The RBI has maintained a stable interest rate since February of last year, but the central bank's job has become more difficult due to a more severe than expected downturn in India's economic growth.The slowdown has raised concerns that the economy may miss the RBI's 7.2% growth prediction for the year ending March 2025 as a result of its restrictive measures.

To boost loan demand and sustain a faltering economy, both Trade Minister Piyush Goyal and Finance Minister Nirmala Sitharaman have allegedly urged for lower borrowing prices.

LSEG data indicated that the Indian rupee hit historic lows versus the U.S. dollar earlier this week, and any monetary easing policies would probably cause the currency to experience additional pressure and lead to capital flight.