The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) has concluded its latest meeting with a unanimous vote to keep the policy repo rate unchanged at 5.50 percent.
Addressing the outcome, RBI Governor Sanjay Malhotra outlined the various factors considered, including GST rate cuts, and trade policies. The decision was made after a detailed assessment of evolving macroeconomic and financial developments.
Consequently, the Standing Deposit Facility (SDF) rate remains at 5.25 percent, and the Marginal Standing Facility (MSF) rate and the Bank Rate stay at 5.75 percent. The MPC also decided to continue with a “neutral” monetary policy stance, indicating a balanced approach to managing inflation and supporting economic growth.
The central bank has revised its inflation and GDP growth estimates for the current and next fiscal year, reflecting its updated outlook on the economy. The new CPI (Consumer Price Index) estimates show a downward revision for the fiscal year 2026 to 2.6% from the previous estimate of 3.1%.
For the second quarter of FY26, the new estimate is 1.8% (down from 2.1%), and for the third quarter, it is also 1.8% (down from 3.1%). The revised estimate for the fourth quarter of FY26 is 4% (down from 4.4%), and for the first quarter of FY27, it is 4.5% (down from 4.9%).
These revisions suggest that the RBI expects inflation to remain well within its target range for the foreseeable future, providing room for it to maintain a stable policy.
In terms of economic growth, the RBI has a more optimistic view. The GDP growth estimate for the fiscal year 2026 has been revised upwards to 6.8% from the earlier 6.5%. For the second quarter of FY26, the new estimate is 7% (up from 6.7%), and for the first quarter of FY27, the estimate is now 6.4% (down from 6.6%). The third and fourth quarters of FY26 also saw minor revisions, with new estimates of 6.4% and 6.2%, respectively.
This positive outlook is likely influenced by strong domestic demand, positive business sentiment, and the beneficial effects of recent government reforms.
The decision to hold rates steady, therefore, reflects a belief that the current economic momentum is sufficient and does not require further monetary stimulus at this time. The RBI will continue to monitor global and domestic developments to ensure sustained and inclusive economic growth while keeping inflation in check.
