The RBI is expected to keep the repo rate at 6.5% during its meeting next week, as India’s Q2 FY25 GDP growth dropped to 5.4% from 6.7% in Q1.
A report by HDFC Bank highlights weak urban demand, slower government spending, and muted private investments as key reasons for the economic slowdown. However, rural demand may recover in H2 FY25, driven by strong agricultural performance and government schemes. The report also raises the possibility of a rate cut in February due to weaker-than-expected GDP data.