The Reserve Bank of India’s (RBI) six-member Monetary Policy Committee (MPC) on Wednesday left the repo rate — the key policy rate — unchanged at 5.5 per cent. The MPC also retained the policy stance as neutral. While the inflation projection for FY26 was lowered to 3.1 per cent, the RBI maintained its forecast for real gross domestic product (GDP) growth for the current year at 6.5 per cent.
RBI keeps key rate unchanged
The Monetary Policy Committee’s (MPC) unanimously decided to keep the repo rate unchanged at 5.5 per cent. The six-member rate-setting panel also decided to continue with the neutral policy stance. RBI Governor Sanjaya Malhotra said that the geopolitical uncertainties have abated but near-term challenges remain.
The MPC meeting was held amid rising uncertainties around trade tariffs and geopolitical tensions, as well as moderation in headline inflation.
RBI’s GDP and inflation projections for FY26
Despite headwinds emanating from prolonged geo-political tensions and trade-related uncertainties, the RBI maintained the real GDP growth projection at 6.5 per cent for FY26.
The RBI lowered the forecast for consumer price index (CPI) inflation for FY26 to 3.1 per cent compared to the earlier projection of 3.7 per cent. The governor said that the inflation outlook has become more benign.
Headline inflation, as measured by year-on-year changes in the all-India consumer price index (CPI), declined to 2.1 per cent in June 2025 – the lowest since January 2019- from 2.8 per cent in May. The retail inflation remained below the 4 per cent target for the fifth consecutive month in June.
Impact on lending rates
Since the RBI left the repo rate steady at 5.5 per cent, all external benchmark lending rates (EBLR) linked to the repo rate will not be revised downward. However, lenders may revise their interest rates on loans that are linked to the marginal cost of fund-based lending rate (MCLR).
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