India's central bank stuck to its guns Wednesday, holding the repo rate steady at 5.5% as anticipated

India's Reserve Bank held its key repo rate steady at 5.5% on Wednesday, matching economist forecasts, as it weighed the lingering effects of prior easing moves.

While inflation eased sharply in the April-June quarter, growth risks loom for the latter half of the fiscal year amid global trade turbulence, RBI Governor Sanjay Malhotra noted. The June 50-basis-point slash's full impact hasn't rippled through yet, he added, with the unanimous pause reflecting caution.

Standard Chartered's Anubhuti Sahay called the nod to future rate room—without a firm timeline—"the right balance" to let prior cuts bed in, expecting the RBI to tread lightly with just 25-50 basis points of wiggle room left amid external fog.

The Monetary Policy Committee echoed that prudence, opting to hold fire post a recent GST trim and as trade snags intensify.

RBI now pencils in 6.8% GDP growth for fiscal 2026, with the current quarter at 7%, easing to 6.4% and 6.2% in the following two—trimmed from prior calls due to trade headwinds, though cushioned somewhat by GST tweaks. Headline inflation averages a benign 2.6% for the year.

Markets shrugged positively: Nifty 50 and Sensex eked out 0.7% gains, while the rupee hovered at 88.67 per dollar.

An October trim would've synced neatly with peak festive borrowing from firms and families, Nomura's Sonal Varma told CNBC, as the season kicks off with Navratri and Diwali.

That timing's thornier after Washington's August hike: a fresh 25% tariff on Indian goods—tied to New Delhi's Russian oil buys—pushing duties to 50%, among the heftiest for any U.S. partner. Labor-heavy sectors like textiles, gems and jewelry, and seafood face the brunt; with U.S. exports at ~2% of GDP, any export slump could spark layoffs.

New Delhi countered with a Sept. 22 GST slash on key items, juicing domestic spending for the month-long holiday binge and cheapening FMCG, cars, and farm goods. Yet Varma warns it's a short-lived jolt; lasting demand hinges on ramping up jobs.

With consumption fueling over 60% of GDP—mirroring the U.S. and U.K.—India's export reliance is low, blunting tariff blows. Goldman Sachs upped its FY26 growth call to 6.7% last month, riding a robust 7.8% Q1 print.