RBI Keeps Repo Rate Unchanged At 5.5%
The Reserve Bank of India (RBI) on Wednesday decided to keep the benchmark repo rate unchanged at 5.5 percent, with the Monetary Policy Committee (MPC) maintaining a “neutral” stance.
The announcement, made by RBI Governor Sanjay Malhotra, comes at a time when the Indian economy is navigating through a mix of domestic tax reforms, external trade pressures, and the aftereffects of earlier monetary easing.
This marks the second consecutive policy meeting where the RBI has opted for a pause, after three successive cuts earlier this year totalling 100 basis points.
— ReserveBankOfIndia (@RBI) October 1, 2025
Explaining the decision, the RBI noted that while inflation remains under control and GST reforms have brought relief to households by reducing taxes on essential items, it is important to allow the transmission of previous rate cuts to flow fully into the economy.
At the same time, uncertainties from the global environment, including additional tariffs imposed by the United States and rising trade tensions, have made the outlook more complex. The central bank, therefore, chose to balance support for growth with the need for stability in prices and financial markets.
Governor Malhotra announced that India’s real GDP growth for the current financial year has been projected at 6.8 per cent, with the second quarter likely to see growth at 7 per cent and the third quarter moderating slightly to 6.2 per cent.
Also Read | Gold Prices Hit New Record: ₹86,760 For 8 Grams
Inflation, meanwhile, is expected to remain comfortably below target, with the consumer price index forecast around 2.6 per cent for the year. This lower inflation trajectory, the RBI said, has been supported by recent tax reforms, easing commodity prices, and a stable supply outlook.
Beyond interest rates, the central bank used the policy meeting to introduce several regulatory measures. Among the most notable was a plan to shift towards risk-based deposit insurance premiums, aimed at incentivising banks to maintain sound risk management practices.
The RBI also confirmed that the Expected Credit Loss (ECL) provisioning framework and revised Basel III norms will be implemented starting April 2027, giving banks nearly 18 months to prepare. In addition, the central bank announced moves to expand capital market lending, including easing restrictions on bank lending against listed shares, as part of efforts to support infrastructure and corporate credit.
Also Read | World’s Haviest 10Kg Gold Dress Worth Dh4.6-Million On Display In Sharjah
The RBI’s decision was largely in line with market expectations, and both the Sensex and Nifty held modest gains after the announcement. Investors welcomed the upward revision in growth forecasts and the softening inflation outlook, viewing the policy as a signal of cautious optimism.
For borrowers, earlier rate cuts have already reduced loan costs, particularly in housing, where developers expect stability in interest rates to aid project planning and support demand during the festive season. On the other hand, depositors face a narrowing window of attractive rates, with most major banks offering between 6.75 to 7 per cent, making long-term deposits an option worth considering.
