RBI keeps repo rate unchanged at 5.5% amid tariff concerns, retains FY26 growth outlook
The Reserve Bank of India on Wednesday kept the repo rate steady at 5.5% after three consecutive cuts, citing global tariff uncertainties. The FY26 growth forecast remains at 6.5%, while inflation projection is lowered to 3.1%.
Mumbai: After three successive interest cuts, the Reserve Bank on Wednesday decided to keep the policy rate unchanged at 5.5 per cent and retained the neutral stance, weighed by concerns over tariff uncertainties.
Announcing the third bi-monthly monetary policy of the current fiscal, RBI Governor Sanjay Malhotra said that the growth rate projection for FY26 has been retained at 6.5 per cent. He further said the Monetary Policy Committee (MPC) unanimously decided to keep the short-term lending rate or repo rate unchanged at 5.5 per cent with a neutral stance.
With regard to inflation forecast, the governor lowered the projection to 3.1 per cent from the earlier estimate of 3.7 per cent for the current financial year. Since February 2025, the RBI has reduced the policy rate by 100 basis points. In its previous policy review in June, it had trimmed the repo rate by 50 basis points to 5.5 per cent.
The central bank has been tasked by the government to ensure that consumer price index (CPI) based retail inflation remains at 4 per cent with a margin of 2 per cent on either side. Based on the recommendation of the MPC, the RBI reduced the repo rate by 25 bps each in February and April, and 50 basis points in June, amidst easing retail inflation.
The retail inflation is trending below 4 per cent since February this year. It eased to a six-year low of 2.1 per cent in June, aided by an easing of food prices and a favourable base effect.
Food inflation, which accounts for nearly half of the Consumer Price Index (CPI) basket, slipped to (-)1.06 per cent in June from 0.99 per cent in May. The decline was largely driven by lower prices in key categories such as vegetables, pulses, meat and fish, cereals, sugar, milk, and spices.
The MPC consists of three RBI officials — Sanjay Malhotra (Governor), Poonam Gupta (Deputy Governor), Rajiv Ranjan (Executive Director) — and three external members — Nagesh Kumar (Director and Chief Executive, Institute for Studies in Industrial Development, New Delhi), Saugata Bhattacharya (Economist), and Ram Singh (Director, Delhi School of Economics).
