RBI reduces repo rate by 25 bps to 5.25%

The Reserve Bank of India Governor Sanjay Malhotra, announcing the fifth bi-monthly policy review of FY26 said that RBIs MPC has unanimously decided to reduce the policy repo rate by 25 basis points to 5.25%. Consequently, the standing deposit facility (SDF) rate shall stand adjusted to 5.00 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 5.50 per cent, the central bank noted. The MPC also decided to continue with the neutral stance.

The projections for average headline inflation in 2025-26 and Q1:2026-27 have been further revised downwards. Core inflation, which had been rising steadily since Q1:2024-25, eased at the margin in Q2:2025-26 and is expected to remain anchored in the period ahead. Real GDP growth for 2025-26 is projected at 7.3 per cent, with Q3 at 7.0 per cent; and Q4 at 6.5 per cent. Real GDP growth for Q1:2026-27 is projected at 6.7 per cent and Q2 at 6.8 per cent. The growth-inflation balance, especially the benign inflation outlook on both headline and core, continues to provide the policy space to support the growth momentum, RBI noted.

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