Summary of this article
Repo rate held at 5.25 per cent, stance neutral
FY26 inflation seen at 2.10 per cent level
FY26 GDP growth projected 7.40 per cent despite uncertainty
The Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 5.25 per cent with the Monetary Policy Committee (MPC) voting unanimously to keep the policy stance at neutral. The decision comes at a time when inflation is expected to stay within the central bank's tolerance band and growth momentum is expected to continue to hold up.
The central bank has retained its headline inflation projection for FY26 at 2.10 per cent, reflecting easing food prices and stable core inflation. For the quarters ahead, consumer price inflation is estimated at 3.20 per cent in the fourth quarter of FY26, rising to 4 per cent in the first quarter of FY27 and 4.20 per cent in the second quarter.
On growth, RBI retained a strong outlook and projected real gross domestic product (GDP) growth at 7.40 per cent for fiscal year 26. Quarterly growth for FY27 is seen at 6.90 per cent in the first quarter and 7 per cent in the second quarter, supported by steady domestic demand, improving investment activity and resilient consumption trends. The central bank said high frequency indicators point towards a sustained economic activity despite global uncertainties.
Alongside the repo rate, RBI has kept the Standing Deposit Facility (SDF) rate unchanged at 5 per cent, while the Marginal Standing Facility (MSF) rate and the bank rate remain at 5.50 per cent. RBI Governor Sanjay Malhotra has reiterated that liquidity conditions will be managed proactively to ensure smooth transmission of monetary policy.
The decision of the RBI MPC meeting 2026 follows a rate reduction cycle that began in early 2025, when the RBI shifted its focus towards supporting growth amid a clear moderation in inflation. The repo rate, which stood at 6.50 per cent at the start of 2025, was cut by 25 basis points in February, marking the first reduction after a prolonged pause. This was followed by a sharper 50 basis point cut in April 2025 as inflation fell decisively below the 4 per cent target.
In June 2025, the MPC delivered another 50 basis point repo rate cut, citing improving supply-side conditions and easing food price pressures. A final 25 basis point reduction in August 2025 took the cumulative easing to 125 basis points, bringing the repo rate to the current level of 5.25 per cent. Since then, the RBI has maintained a pause, emphasising the need to assess the full transmission of earlier policy actions.
