Mumbai: The Reserve Bank of India (RBI) has decided to keep the repo rate steady at 5.50 percent, continuing with a neutral policy stance. This decision came after the fourth meeting of the RBI’s Monetary Policy Committee (MPC) for the 2025–26 financial year.
This is the second straight time the RBI has kept rates unchanged, after cutting them three times earlier this year to support economic growth. The rate had come down from 6.5 percent to 5.5 percent through three 25-50 basis point cuts in February, April, and June.
GDP Outlook Raised, Inflation Forecast Lowered
In a positive signal, the RBI raised the GDP growth forecast for FY26 to 6.8 percent, up from 6.5 percent earlier. At the same time, it reduced its inflation estimate to 2.6 percent, from 3.1 percent. This reflects the central bank’s optimism about India’s economic strength and improving price stability.
GST Changes May Boost Spending
Governor Sanjay Malhotra highlighted recent GST rate rationalisation as a step that could help lower inflation and increase consumer spending. However, he also warned that higher global tariffs could impact India’s exports and create uncertainty in the economic outlook.
Global Factors on RBI’s Radar
The RBI is closely watching international developments like the H-1B visa fee hike and the HIRE Act in the US, which could affect India’s job market and remittances. These could influence future rate decisions.
Looking Ahead
While the RBI stayed cautious this time, it remains ready to act if inflation or growth trends shift significantly. For now, markets and businesses can plan around stable interest rates and a stronger economic outlook.
