The Reserve Bank of India (RBI) on Wednesday decided to maintain the repo rate at 5.5 per cent, with the Monetary Policy Committee (MPC) choosing to continue with a neutral stance as it evaluates evolving economic conditions.
Explaining the decision, RBI Governor Sanjay Malhotra said inflation risks have moderated in recent months, aided by a sharp fall in food prices and the impact of GST rate cuts. As a result, the central bank has revised its average inflation forecast for 2025–26 to 2.6 per cent, lower than its earlier estimate.
The outlook for economic growth has improved as well. The MPC raised its GDP growth projection to 6.8 per cent, citing resilient domestic demand, a healthy monsoon, easing financial conditions, and policy support measures taken earlier.
The Governor noted that the RBI is in a wait-and-watch mode, allowing past policy actions to transmit fully through the economy. “It is important to assess how earlier measures are influencing growth and inflation before deciding on the next steps,” he said.
Since February, the RBI has reduced the repo rate by 100 basis points, a move aimed at easing borrowing costs for households and businesses. Combined with adequate liquidity, these measures are expected to support consumption, investment, and overall economic momentum in the coming quarters.