RBI MPC keeps repo rate unchanged at 5.5%, says Governor Sanjay Malhotra; stance remains 'neutral'

In line with analysts' expectations, the Reserve Bank of India (RBI) on Wednesday decided to keep the key repo rate unchanged at 5.5%, the central bank’s Governor Sanjay Malhotra announced after the three-day Monetary Policy Committee (MPC) meeting. The committee also maintained its ‘neutral’ policy stance.

Following the decision, the standing deposit facility (SDF) rate remained at 5.25%, while the marginal standing facility (MSF) rate and Bank Rate continued at 5.75%.

“The MPC observed that the overall inflation outlook has turned even more benign in recent months, due to a sharp decline in food prices and GST rate rationalisation,” Governor Malhotra said.

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He added that headline inflation for 2025-26 has been revised down to 2.6% from 3.1% in August, with quarter-wise estimates of 1.8% in Q2 and Q3, and 4% in Q4. Core inflation is also expected to remain contained.

The central bank noted that India’s growth outlook remains resilient, supported by domestic drivers, a favourable monsoon, lower inflation, monetary easing, and the positive impact of recent GST reforms. However, trade-related headwinds and geopolitical uncertainties may slow growth in the second half of FY26.

Also Read: RBI MPC Meeting 2025-26 Key Takeaways: Check all announcements made by Malhotra & co

The MPC revised India’s GDP growth for 2025-26 to 6.8%, up from the 6.5% forecast in August. Quarterly projections include 7.8% in Q1, 7% in Q2, 6.4% in Q3, and 6.2% in Q4. Growth for Q1 of 2026-27 is projected at 6.4%.

“An above-normal monsoon, good progress in kharif sowing, and adequate reservoir levels support agriculture and rural demand. Services sector growth and stable employment further underpin domestic consumption. Fixed investment is expected to gain from rising capacity utilisation and conducive financial conditions. However, ongoing tariff and trade uncertainties, along with global market volatility, pose downside risks,” Malhotra said.

Also Read: RBI GDP growth 2025: Central bank revises FY26 growth forecast to 6.8%

Industry experts highlighted the implications for borrowers. ANAROCK Group chairman Anuj Puri said, “RBI's decision to keep the repo rate unchanged at 5.5% maintains home loan EMIs at current levels, which helps sustain buyer sentiment but does not improve housing affordability.”

Kotak Mahindra Bank’s Chief Economist Upasna Bhardwaj noted, “The MPC has delivered a dovish pause. Growth risks from tariff uncertainties create room for further rate cuts if needed. We see scope for 25-50 bps cuts in the remainder of FY26.”

The MPC also emphasised that the impact of previous rate cuts and recent fiscal measures is still unfolding, and the committee chose to wait for greater clarity before any further action.