RBI may keep interest rates on hold as slim Modi win boosts fiscal risks

Economists had already been pushing their forecasts for rate cuts to later in the year, predicting the RBI won't move until the US Federal Reserve pivots

The Reserve Bank of India will probably leave the benchmark rate at 6.5 per cent for an eighth straight meeting on Friday, according to all 34 economists polled by Bloomberg. The six-member monetary policy committee is also expected to retain its stance.

The decision comes just days after Modi’s Bharatiya Janata Party lost its majority in parliament and is forced to share power in a coalition government. Economists say there’s a risk a BJP-led government may veer from its fiscal path by raising welfare spending to shore up support, an approach that may stoke inflation that’s already above the RBI’s target.