Mumbai, Oct 1: The Reserve Bank of India (RBI) on Wednesday decided to keep its policy interest rate unchanged at 5.5 per cent for the second consecutive review, citing uncertainties around global tariffs and their potential impact on economic growth.
Announcing the fourth bi-monthly monetary policy of FY2025-26, RBI Governor Sanjay Malhotra said the Monetary Policy Committee (MPC) unanimously opted to maintain the short-term lending rate, or repo rate, at 5.5 per cent with a neutral stance.
“The rationalisation of GST rates may temper consumption and growth, while tariff-related developments could slow economic expansion in the second half of the fiscal,” Malhotra noted.
Since February 2025, the RBI has reduced the policy rate by 100 basis points, including a 50-bps cut in June. These measures were aimed at sustaining economic growth while keeping consumer inflation in check.
Retail inflation, measured by the Consumer Price Index (CPI), has remained below 4 per cent since February and eased to a six-year low of 2.07 per cent in August, supported by easing food prices and favourable base effects.
The central bank continues to monitor inflation trends closely, with the government tasking the RBI to maintain CPI-based retail inflation at 4 per cent, with a tolerance margin of 2 per cent on either side.
This decision signals the RBI’s cautious approach amid global trade uncertainties while supporting continued economic stability.