RBI keeps interest rate steady to ensure stability.
RBI Governor Sanjay Malhotra announced that the growth rate projection for the financial year 2025-26 (FY26) has been retained at 6.5 per cent. He emphasized that the Indian economy continues to show resilience amid global uncertainties, and the central bank remains focused on maintaining macroeconomic stability. The projection reflects confidence in domestic demand, investment momentum, and supportive government policies. Malhotra added that while global headwinds persist, the RBI’s calibrated monetary stance aims to balance growth and inflation objectives, ensuring sustained economic recovery and financial sector robustness throughout FY26.
RBI holds interest rate steady at 5.5% amid global uncertainty; growth forecast unchanged at 6.5%
Mumbai: In a much-anticipated move, the Reserve Bank of India (RBI) on Wednesday decided to hold the key interest rate steady at 5.5 per cent, following three consecutive rate cuts earlier this year. The decision comes against the backdrop of ongoing concerns about global tariff uncertainties and a fragile external environment.
Announcing the third bi-monthly monetary policy of the current financial year, RBI Governor Sanjay Malhotra said the Monetary Policy Committee (MPC) unanimously opted to retain the repo rate—the rate at which the central bank lends short-term funds to commercial banks—at 5.5 per cent. The RBI also maintained its neutral policy stance, indicating it is neither inclined toward tightening nor easing the policy further in the near term.
Malhotra emphasized that while the Indian economy remains resilient, the global outlook remains uncertain, and a cautious approach is warranted. “Given the volatility in the global trade environment and financial markets, the MPC felt it was prudent to pause and assess the impact of previous rate reductions before considering further action,” he said during a press conference in Mumbai.
The central bank also retained its growth forecast for FY26 at 6.5 per cent, citing strong domestic demand, steady progress in infrastructure development, and supportive government policies. According to Malhotra, “India’s fundamentals are sound. Investment activity is picking up, and consumption continues to be a strong driver. We remain confident that the economy is well-placed to achieve our projected growth.”
In a welcome move for consumers, the RBI revised its inflation forecast downward, lowering the consumer price index (CPI)-based retail inflation estimate to 3.1 per cent for the current financial year, down from its earlier projection of 3.7 per cent. This adjustment reflects recent moderation in food and fuel prices, along with easing global commodity costs.
The latest revision suggests that inflation is comfortably within the target range, giving the central bank some breathing space.
Since February 2025, the RBI has cumulatively reduced the repo rate by 100 basis points, including a 50 basis points cut in June. These steps were aimed at reviving growth amid sluggish global demand and moderating inflationary pressures. However, with growth showing signs of stabilization and inflation trending lower, the central bank has now chosen to pause.
The six-member Monetary Policy Committee comprises three RBI officials and three external experts. The internal members include Governor Sanjay Malhotra, Deputy Governor Poonam Gupta, and Executive Director Rajiv Ranjan. The external members are Dr. Saugata Bhattacharya, an economist; and **Prof.
Looking ahead, the RBI is expected to remain data-dependent and responsive to both domestic economic conditions and external developments. Governor Malhotra noted that while inflation is under control and growth prospects are steady, “we are not letting our guard down.”
The central bank’s decision to hold rates, coupled with a benign inflation outlook, is likely to reassure markets and encourage both consumer and business confidence, while giving policymakers time to assess the full impact of previous rate actions.