The Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 5.5% in its latest monetary policy meeting held this week. This decision marks a pause after three consecutive rate cuts. Despite inflation being under control, RBI wants to wait and watch the market before making any further changes.

One major reason behind this cautious approach is the upcoming 25% tariffs from the United States on Indian imports. These international trade tensions have pushed the RBI to act carefully. Even though retail inflation in June fell to 2.1%, which is below RBI’s target of 4%, the committee felt it’s safer to hold the rates steady for now.

Experts believe this move is aimed at assessing the impact of earlier rate cuts and supporting demand during the festive season. RBI has also hinted that future rate cuts are possible depending on how the economic conditions evolve.