India's central bank revises down economic growth forecast for 2025, keeps interest rate steady

India's central bank expectedly kept the benchmark interest rate unchanged at 6.50% on Friday as it struggles to contain rising inflation without hurting growth in Asia's third-largest economy.

The decision came in line with economists' expectation in a Reuters poll, as India's consumer prices inflation surged to a 14-month high of 6.21% in October, significantly higher than the central bank's target of 4% and also above its tolerance ceiling of 6%.

Reserve Bank of India Governor Shaktikanta Das said the central bank had revised India's GDP growth outlook for fiscal year 2025 down to 6.6% — RBI had forecast 7.2% growth in October — adding that the slowdown in the domestic economy had "bottomed out" in the September quarter.

The central bank also announced a cut to banks' cash reserve ratio by 50 basis points to 4.0% to bolster liquidity in the economy.

The RBI has held the interest rate steady since February last year, however, a sharper-than-anticipated slowdown in India's economic growth has made the central bank's task tougher.

In the July to September period, India's economy grew 5.4% from a year ago, drastically missing Reuters-polled economists' expectation of 6.5%, and marked the slowest pace in nearly two years.

The slowdown has prompted worries that the RBI's restrictive policies may be putting the economy at risk of missing its forecast of 7.2% growth for the year through March 2025.

Both Finance Minister Nirmala Sitharaman and Trade Minister Piyush Goyal have reportedly called for lower borrowing costs to bolster lending demand and support a slowing economy.

"At a time when we want industries to ramp up and build capacities, bank interest rates will have to be far more affordable," the finance minister said at an