RBI Policy October 2025: Repo Rate Unchanged at 5.5%, Maintains Neutral Stance
1 Oct, 2025 11:01 IST|Sakshi Post
The Reserve Bank of India (RBI) on Wednesday kept the policy repo rate unchanged at 5.5%, as the Monetary Policy Committee (MPC) concluded its three-day meeting chaired by Governor Sanjay Malhotra. The central bank also decided to maintain its neutral stance.
“After assessing the evolving macroeconomic conditions and outlook, the MPC unanimously voted to keep the policy repo rate at 5.5%. Accordingly, the Standing Deposit Facility (SDF) rate remains at 5.25%, while the Marginal Standing Facility (MSF) rate and the Bank Rate stay at 5.75%,” said Governor Malhotra.
Inflation Trends
RBI highlighted a sharper-than-expected decline in inflation, largely due to falling food prices and GST rate cuts.
- The average headline inflation forecast for FY25-26 has been revised down to 2.6%, compared with 3.7% in June and 3.1% in August.
- CPI inflation is projected at 1.8% in Q2 and Q3, rising to 4% in Q4 and 4.5% in Q1 of FY26-27.
“Favourable monsoons, strong crop sowing, healthy reservoir levels, and adequate food stocks are expected to keep food prices in check,” Malhotra noted.
Growth Outlook
The RBI projected real GDP growth for FY26 at 6.8%, supported by domestic demand, policy reforms, and easing inflation.
- Quarterly estimates: Q2 at 7%, Q3 at 6.4%, Q4 at 6.2%, and Q1 of next year at 6.4%.
“Despite resilient domestic drivers, global uncertainties, including trade-related tensions and tariffs, may weigh on growth in the second half of the year,” the governor added.
Why RBI Held Rates
The MPC underlined that it had already implemented a 100-basis-point rate cut earlier this year. The impact of this easing, along with government reforms like GST rationalisation and changes in income tax slabs, is still unfolding.
“Given these factors, the committee decided to wait for clearer signals before altering the policy stance,” said Malhotra.
Risks and Global Context
RBI flagged external risks, including high US tariffs, rupee depreciation, and global trade uncertainties, which could impact exports and capital flows. However, robust domestic demand, strong harvest prospects, and government spending are expected to cushion the economy.
Economist Dr. Manoranjan Sharma, Chief Economist at Infomerics Ratings, remarked:
“By holding rates, the RBI has taken a prudent approach—balancing inflation risks and growth needs. The neutral stance keeps the central bank flexible to respond to future developments.”
