Mumbai : RBI on Wednesday decided to keep the key repo rate unchanged at 5.5%, as the Monetary Policy Committee (MPC) concluded its three-day meeting led by Governor Sanjay Malhotra. After a detailed assessment of the evolving macroeconomic conditions and the outlook, the MPC voted unanimously to keep the policy repo rate unchanged at 5.5%.
The SDF rate remains at 5.25%, while the MSF rate and the bank rate remain at 5.75%. The MPC also decided to continue with a neutral stance,” said Sanjay Malhotra. The RBI governor explained that inflation has come down more than expected in recent months. The average headline inflation forecast for the year has been revised down to 2.6%, compared to 3.7% projected in June and 3.1% in August.
Inflation conditions remain benign during 2025-26, with actual outcomes turning out to be significantly lower than our projections. Low inflation is primarily attributed to a sharp fall in food inflation, aided by improved supply prospects and measures taken by the government to manage the supply chain, said Malhotra. He added that favourable monsoon rains, healthy crop sowing, good reservoir levels and adequate food grain stocks should keep food prices in check.
On growth, the RBI projected real GDP for FY26 at 6.8%. The break-up of quarterly estimates is: Q2 at 7%, Q3 at 6.4%, Q4 at 6.2%, and Q1 of the next financial year at 6.4%. Growth outlook remains resilient, supported by domestic drivers, despite weak external demand. It is likely to get further support from a favourable monsoon, lower inflation, monetary easing and the impact of the recent GST reforms. However, growth continues to be below our aspirations, said Malhotra.
The MPC noted that there has already been a front-loaded reduction in policy rates this year, with a 100-basis-point cut earlier. The impact of these steps, along with government reforms such as changes in income tax slabs and GST rationalisation, is still playing out.
The MPC therefore considered it prudent to wait for the impact of policy actions to play out and for greater clarity to emerge before starting the next course of action. Accordingly, the MPC unanimously voted to keep the policy repo rate unchanged at 5.5% and decided to retain the stance at neutral,” Malhotra said.
The RBI governor also pointed to external risks, including high tariffs from the US, rupee depreciation, and global trade uncertainties. By not rushing into rate cuts, the RBI has demonstrated a prudent and forward-thinking approach, adroitly balancing both inflationary pressures and the need for sustainable growth.
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