Mumbai, Aug 5 (PTI) The Reserve Bank of India on Wednesday maintained a status quo on its benchmark policy rate for the fourth consecutive meeting and retained the stance as "neutral", with Governor Sanjay Malhotra saying the next move of the central bank on interest rates, as well as policy stance, will be data dependent.

The prime focus of the central bank is to align the headline inflation with its target of 4 per cent over the medium term, Malhotra said at the post-policy press conference.

The six-member Monetary Policy Committee unanimously voted to keep the policy repo rate unchanged at 5.25 per cent, and opted to wait for more clarity on whether higher energy costs in the wake of the West Asia crisis feed into broader inflationary pressures.

Announcing the policy decision, Malhotra said the headline inflation is expected to rise in the near term and peak in the third quarter of 2026-27, largely due to food and fuel prices, before moderating.

Inflation pressures have not become broad-based, with core inflation, excluding precious metals, remaining benign, he added.

Malhotra reiterated the RBI's "resolute" commitment to bringing inflation in line with its target while awaiting greater clarity on the inflation outlook.

The central bank marginally raised the GDP forecast for the current fiscal to 6.7 per cent while slightly lowering the inflation projection to 5 per cent.

In the June policy, it had projected the GDP growth for FY27 at 6.6 per cent and inflation at 5.1 per cent.

Although generalised inflation pressures continue to remain modest so far, the risks of higher food, fuel and other input prices translating into a broad-based increase in inflation persist, it said.

The central bank said despite heightened global uncertainty due to the West Asia conflict and trade tensions, India's GDP growth remained resilient, supported by robust domestic demand, manufacturing and services activity and strong exports.

It, however, warned that the outlook remains uncertain due to risks from the southwest monsoon, El Nino conditions, geopolitical developments and global trade policies.

"Global economic conditions and sentiments continue to remain hostage to the rapidly oscillating developments, both in scale and intensity, of the West Asia conflict. While these have impacted the domestic growth-inflation outlook adversely, the stronger macroeconomic fundamentals of the Indian economy are helping navigate this global shock resolutely," Malhotra said.

This, he said, presents an opportunity to accelerate measures to enhance our resilience to withstand such shocks. "We shall continue to implement policies that further fortify our economy. Whether it is facilitating sustainable growth or promoting consumer protection; whether it is preserving stability of prices, the financial system or the currency, we will do whatever it takes to ensure the same." System liquidity remained in surplus, and the RBI said it would continue to conduct two-way liquidity operations to ensure adequate liquidity in the banking system and align the weighted average call rate with the policy repo rate.

Regarding the Foreign Currency Non-Resident (Bank) deposit scheme, Malhotra said the flows have been "robust", and the RBI expects healthy movement of funds going forward till the closure of the limited-period scheme.

Asked if the central bank is looking to close the scheme prematurely, given that there is a cost which the RBI is committed to bear for the fund inflows, Malhotra said there is no such proposal as of now.

When pointed out that the rupee has not appreciated as intended despite the high flows from foreign shores, the governor said a further strengthening in the rupee is possible if geopolitical tensions de-escalate.

It will be the RBI's endeavour that the trajectory for the rupee remains orderly, he added.

The RBI also said it is targeting to launch long-lasting polymer currency notes at the beginning of the next financial year.

The polymer currency notes have lasted for over 30 years in some jurisdictions and will come in handy, especially for the lower denomination notes which have high velocity, Malhotra said at the press conference.

"We are targeting that they are in circulation, if everything goes as per plan, in the beginning of the next financial year," he added.

To improve transparency and consumer protection, the central bank proposed harmonising and standardising the regulatory framework governing interest rates on advances across all regulated entities. PTI TEAM VHI HVA