RBI Holds Repo Rate at 5.50%, Lifts Growth Outlook, Cuts Inflation Forecast

Mumbai: The Reserve Bank of India (RBI) on Wednesday opted to keep the repo rate steady at 5.50 percent, maintaining a neutral policy stance after the conclusion of the fourth meeting of its Monetary Policy Committee (MPC) for the 2025–26 financial year.

This marks the second consecutive policy review where the RBI has left rates unchanged, following three successive cuts earlier this year that brought the repo rate down from 6.5 percent to 5.5 percent through reductions of 25–50 basis points in February, April, and June.

In a clear signal of confidence, the RBI raised India’s GDP growth forecast for FY26 to 6.8 percent, up from 6.5 percent earlier. At the same time, it trimmed its inflation projection to 2.6 percent, compared with 3.1 percent previously, pointing to stronger price stability and improving economic momentum.

RBI Governor Sanjay Malhotra highlighted the recent GST rate rationalisation as a positive move that could help bring down inflation and boost consumer demand. But he cautioned that rising global tariffs might weigh on exports, adding an element of uncertainty to India’s growth trajectory.

The central bank also flagged external risks, noting that developments like the H-1B visa fee hike and the HIRE Act in the United States could affect India’s job market and inward remittances, potentially influencing future policy decisions.

For now, the RBI has chosen to stay cautious but flexible. “We are closely monitoring both domestic and global conditions. If inflationary pressures or growth patterns change significantly, appropriate action will be taken,” Malhotra said.