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(Bloomberg) — India’s inflation was broadly steady in July, holding within the Reserve Bank’s 2%-6% target range and cementing expectations policymakers will keep interest rates unchanged for some time.

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The consumer price index rose 4.45% in July from a year earlier, the Ministry of Statistics and Programme Implementation said Wednesday. That compared with a 4.40% median estimate in a Bloomberg survey of economists. The reading remained inside the RBI’s tolerance band for a seventh straight month.

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The figures reinforce the RBI’s decision to hold rates at 5.25% for a fourth straight meeting last week, with attention turning to whether price pressures stay contained. Policymakers have voiced the need for greater clarity on the path and composition of inflation before acting. 

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Last week, Governor Sanjay Malhotra warned headline price growth will likely rise further in the near term and peak in the December quarter, largely on higher food and fuel costs. The central bank’s latest forecasts show inflation will rise to 5% in the year through March. In June, the figure breached the RBI’s 4% target for the first time in 17 months.

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Yet, he expressed confidence about the inflation outlook on Tuesday, saying price pressures remain “more or less under check.”

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Inflation has hovered near the RBI’s 2% lower bound for much of 2025. While weak price pressures supported rate cuts last year, the RBI is now confronting a pickup in inflation.

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So far though, it has stood apart from many regional central banks by leaving policy unchanged this year, even as counterparts from Japan to Australia and Indonesia tightened monetary settings. 

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Indian officials view the ongoing war in the Middle East as a temporary supply shock, arguing monetary policy should respond only if higher energy costs trigger more broad-based inflation. With growth remaining among the strongest of any major economy and inflation still within target, the central bank has room to wait.

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The inflation outlook will be important for consumption as India heads into the festive season. Lower crude prices and improving monsoon rains could also ease inflation risks in the coming months, strengthening the case for an extended rate pause, economists say.

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