RBI policy: MPC maintains repo rate at 5.5%, keeps stance 'neutral'

RBI MPC August meet: The monetary policy committee eased inflation projections for FY26 to 3.1%, down from 3.7%; GDP forecast remains unchanged

The Reserve Bank of India’s Monetary Policy Committee (MPC), chaired by Governor Sanjay Malhotra, on Wednesday decided to keep the benchmark repo rate unchanged at 5.5 per cent. The decision, taken with a 6-0 unanimous vote, comes after three consecutive rate cuts earlier this year. 

 

The committee also maintained its policy stance at ‘neutral’, signalling that future moves will depend on inflation and growth dynamics.

 

The Standing Deposit Facility (SDF) rate remains at 5.25 per cent, while the Marginal Standing Facility (MSF) rate and the Bank Rate are unchanged at 5.75 per cent each.  READ LATEST RBI MPC UPDATES TODAY LIVE

Cash reserve ratio cut to be effective from September

The RBI reiterated that the cash reserve ratio (CRR) cut, announced in June, will be effective from September to support banking system liquidity. Governor Sanjay Malhotra said the CRR cut will “ensure adequate liquidity in the banking system to support credit growth and smooth financial market functioning", adding that policy rates would remain unchanged to allow earlier rate cuts to transmit through the economy.

 

In the June MPC meet, the RBI decided to cut the CRR by 100 basis points to 3 per cent from 4 per cent of net demand and time liabilities (NDTL), in four equal tranches of 25 basis points each. The reductions will take effect on September 6, October 4, November 1, and November 29, 2025.

 

RBI MPC eases inflation forecast for FY26

The RBI’s MPC has revised its Consumer Price Index (CPI)-based inflation projections, sharply decreasing estimates for the financial year 2025-26 (FY26), mainly due to softer food prices, a favourable base effect, and easing global commodity costs.

 

The FY26 inflation forecast has been eased to 3.1 per cent, down from 3.7 per cent, with Q2 FY26 dropping to 2.1 per cent from 3.4 per cent. However, inflation is expected to climb back toward 4.9 per cent in the first quarter of the next financial year (FY27) as the low base fades.  ALSO READ | RBI lowers inflation forecast to 3.1% for FY26; growth outlook unchanged 

The quarterly inflation forecast stands as follows:

 

Q2 FY26: 2.1 per cent, down from 3.4 per cent

 

Q3 FY26: 3.1 per cent, down from 3.9 per cent

 

Q4 FY26: Maintained at 4.4 per cent

 

Q1 FY27: 4.9 per cent

 

FY26: 3.1 per cent, down from 3.7 per cent

 

RBI MPC maintains growth forecast

The RBI has kept its real gross domestic product (GDP) growth forecast for FY26 unchanged at 6.5 per cent, supported by resilient domestic demand, government capital spending, and improving rural consumption. Quarterly projections indicate steady momentum, with growth peaking in Q2 before moderating slightly toward year-end.

 

The quarterly GDP forecast stands as follows:

 

Q1 FY26: 6.5 per cent

 

Q2 FY26: 6.7 per cent 

 

Q3 FY26: 6.6 per cent

 

Q4 FY26: 6.3 per cent

 

FY26: 6.5 per cent