What did RBI say about India's economy?

Before we jump into what the RBI said, let's quickly understand the repo rate. 

This is the interest rate at which banks borrow money from the RBI. If it goes up, loans become costlier. If it comes down, EMIs usually get cheaper for consumers and businesses.

Breaking it down: the central bank has decided to keep the repo rate unchanged at 5.25%. This marks the third straight policy meeting where rates have been left untouched.

RBI also maintained its "neutral" stance, which in simple words means it is not leaning strongly towards either raising rates or cutting them. Instead, it wants to watch how inflation, growth, oil prices, and global events evolve before making its next move.

We all know that rising tensions in West Asia have pushed up crude oil prices, creating concerns about inflation and economic growth.

Remember, India imports more than 85% of its crude oil requirements. So when oil prices rise, everything from transportation and logistics to manufacturing becomes more expensive. Eventually, some of those costs find their way into everyday expenses.

According to the RBI, India's domestic economy remains relatively stable despite these global challenges. Consumption, investment activity, and business conditions continue to hold up well.

What changed: the central bank is now slightly more cautious.

FY27 GDP growth forecast has been lowered to 6.6% from 6.9% earlier, signalling that higher energy prices and global uncertainty could slow economic activity somewhat.

Inflation forecast raised to 5.1% from 4.6% earlier. In simple words, the RBI now expects prices to rise faster than it previously thought.

The biggest concern: food and energy prices. 

However, the reassuring bit is strong foreign exchange reserves. RBI said India's forex reserves currently stand at $682.3 billion, giving the country a sizeable buffer against global shocks.

To strengthen that position further, the central bank announced several measures aimed at attracting more foreign capital into India, including easier investment rules for foreign investors and overseas Indians.