The Reserve Bank of India’s latest Monetary Policy Committee (MPC) decided to keep the policy interest rate (or repo rate) unchanged at 5.5 per cent, and retains its neutral stance on the growth of Indian economy.
The latest move by the RBI was announced by the apex bank’s chief Sanjay Malhotra, who chaired the latest MPC meeting that concluded today.
RBI Governor Malhotra noted that the MPC “unanimously voted” to keep the repo rate unchanged, after it decided to wait for policy actions by the Union government to play out in the coming months.
India growth below RBI expectations
“Growth continues to be below our aspirations,” announced Malhotra.
“Even though the growth projection for the current financial year is now being revised upwards, the overlooking projections for Q3 and beyond are expected to be lower than what was projected earlier,” the RBI governor stressed.
“This is primarily due to trade-related headwinds despite being partially offset by the impetus of the recent GST reforms,” reasoned Malhotra.
However, the MPC noted a “significant moderation” in overall inflation but highlighted that the growth in second half of the current fiscal year might be affected by tariff-related factors.
The RBI chief said that the MPC decided to wait and see how the policy actions in response to tariffs and inflation would play out, and see if “a greater clarity would emerge” before they decide the next course of action.
MPC lifts GDP growth outlook to 6.8 per cent
The Monetary Policy Committee revised the GDP growth outlook for fiscal 2026 to 6.8 per cent from the earlier projection of 6.5 per cent.
Malhotra also noted that India’s inflation lowered due to the reduction in food inflation, and stated that the impact would be much softer than what was projected in August due to the latest GST reforms.
So far, in 2025, repo rate was reduced thrice from 6.5 per cent—25bps in February, another 25bps in April, and a massive 50bps cut in June. In the August MPC, repo rate was kept steady at 5.5 per cent.
Despite the overall dip, stakeholders in certain sectors were expecting another rate cut. “We were looking forward to a supportive stance from the RBI in the monetary policy during the ongoing festive season. A rate cut at this juncture would have been highly encouraging for homebuyers and developers alike,” noted Ramani Sastri, Chairman & MD of Sterling Developers. “However, the decision to maintain status quo will keep the ongoing residential real estate sales momentum on course, offering homebuyers assurance of steady loan terms.”
