RBI keeps repo rate unchanged at 5.5%, maintains FY26 GDP forecast at 6.5%

The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC), headed by Governor Sanjay Malhotra, announced its decision today to keep the key repo rate unchanged at 5.5 per cent. The decision comes after a series of three consecutive rate cuts totaling 100 basis points in the preceding MPC meetings. The three-day deliberation, which began on Monday, August 4, concluded with a unanimous decision to maintain a "Neutral" stance.

The repo rate, a crucial tool in the RBI's monetary policy arsenal, is the interest rate at which the central bank lends money to commercial banks. By keeping this rate steady, the RBI aims to assess the full impact of its recent accommodative measures on the economy and inflation. The decision signals a period of watchful waiting, as the central bank navigates a complex economic landscape marked by both domestic and international factors.

In a separate but notable move, the MPC had previously announced a significant 100-basis-point reduction in the Cash Reserve Ratio (CRR) in its June meeting. This reduction, to be implemented in four tranches of 25 basis points each starting from September 2025, is expected to inject liquidity into the banking system and encourage lending. The CRR is the percentage of a bank's total deposits that must be held with the RBI as reserves in cash form.

Despite the prevailing global uncertainties, including new tariffs imposed by the US, Governor Malhotra reiterated the RBI's positive outlook on India's economic growth. During the announcement, he maintained the RBI's forecast for the country's GDP growth for the financial year 2025-26 at 6.5 per cent. This projection reflects the central bank's confidence in the resilience of the Indian economy and its ability to withstand external headwinds.