The Reserve Bank of India kept its benchmark repo rate unchanged at 5.25% on Wednesday, positioning the central bank as a notable holdout in a region where peers are tightening policy to defend currencies.
Governor Sanjay Malhotra emphasized a data-dependent approach, signaling that policymakers do not view the latest oil price shock as a threat to the country's growth trajectory or a driver of persistent inflation that would necessitate higher interest rates.
This decision marks a sharp divergence from the policy stance of other major Asian economies.
Bank Indonesia recently executed an unexpected rate hike to stem a sharp depreciation of the rupiah against the US dollar, reflecting mounting concerns over capital outflows and external vulnerabilities.
In contrast, the RBI has opted to maintain its current stance, relying instead on active foreign exchange intervention to manage currency volatility rather than adjusting monetary policy.
The RBI has stepped up its defense of the rupee, expanding intervention efforts across multiple market segments to prevent further depreciation.