RBI Keeps Repo Rate at 5.5%, Signals No Cheap Loans; Inflation Forecast Lowered

Mumbai (The Uttam Hindu): The Reserve Bank of India (RBI), under Governor Sanjay Malhotra, announced the outcomes of the Monetary Policy Committee (MPC) meeting on Wednesday. The central bank has kept the repo rate unchanged at 5.50% and maintained a neutral stance on monetary policy.

Alongside the repo rate, the Standing Deposit Facility (SDF) remains at 5.25%, while the Marginal Standing Facility (MSF) is steady at 5.75%. This follows the August MPC meeting, where the repo rate was also held steady. Since the beginning of 2025, the RBI has reduced the repo rate by a cumulative 1%, including 0.25% in February, 0.25% in April, and 0.50% in June.

Governor Malhotra stated that the Indian economy is performing well, aided by a good monsoon, which has contributed to a decline in inflation. Additionally, GST cuts have boosted economic growth, although export concerns remain due to tariffs. The RBI has lowered its retail inflation forecast for FY26 to 2.6%, down from 3.1% in August.

Inflation projections for the second quarter of FY26 have been revised from 2.1% to 1.8%, the third quarter from 3.1% to 1.8%, and the fourth quarter to 4%. For FY27’s first quarter, inflation is projected at 4.5%.

On growth, the RBI has raised its GDP forecast for FY26 from 6.5% to 6.8%, noting that momentum seen in the first quarter continues. Quarterly GDP growth is expected at 7% in Q2, 6.4% in Q3, and 6.2% in Q4.