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RBI expected to hold repo rate at 5.25% as core inflation stays subdued

ING economists say June headline inflation rose due to fuel, but core inflation remains below target, giving the RBI room to keep current policy while watching oil and El Niño risks.

Reported · Written up by our desk · Central Banks

ING economists Deepali Bhargava and Lynn Song expect the Reserve Bank of India to keep its repo rate unchanged at 5.25% this week.

They point to a pickup in June headline inflation driven by higher fuel prices, while core inflation remains below target, which they say supports maintaining current policy settings rather than tightening further.

ING also flags risks the RBI is likely to monitor, including elevated oil prices and the possibility of a severe El Niño that could affect food inflation.

The outlook reflects a broader policy stance focused on balancing inflation risks, with the RBI expected to hold steady while watching how those external factors develop.

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