RBI Holds Repo Rate at 6.5%, Ups FY26 GDP Growth to 7.4%

The Reserve Bank of India (RBI) held the benchmark repo rate steady at 6.5% following its latest Monetary Policy Committee (MPC) meeting. The decision aligns with market expectations and reflects the central bank’s ongoing focus on inflation control and macroeconomic stability. This is the sixth consecutive time that the repo rate has been left unchanged since February 2023.

GDP Growth Projection for FY26 Revised Upward

Alongside the interest rate decision, the RBI revised its gross domestic product (GDP) growth forecast for the financial year 2025–26 to 7.4%. The upward revision indicates a more optimistic outlook for India’s economic expansion, supported by strong domestic demand, resilient urban consumption, and a continued recovery in the services and industrial sectors.

Policy Stance Aimed at Price Stability and Sustainable Growth

The central bank reaffirmed its monetary policy stance of “withdrawal of accommodation” to ensure inflation remains aligned with its medium-term target of 4%, while supporting the ongoing growth momentum. Officials noted that although headline inflation has moderated in recent months, risks remain from global geopolitical tensions and supply chain disruptions affecting food and energy prices.

Inflation Trends Remain a Key Consideration

Consumer price inflation continues to hover above the RBI’s target range, although it has eased from previous highs. The central bank emphasized that it will remain vigilant about inflationary pressures and will take appropriate actions if required. Food inflation, particularly in vegetables and pulses, remains an area of concern due to seasonal factors and supply constraints.

RBI Observes Strength in Economic Fundamentals

India’s economic fundamentals were described as stable, with indicators such as industrial output, credit growth, and services activity showing consistent performance. The central bank also highlighted the moderation in the current account deficit and overall improvement in foreign exchange reserves, which contribute to macroeconomic resilience.

Financial Sector Conditions and Liquidity Management

The RBI noted that the financial sector remains sound and well-capitalised. Liquidity conditions have tightened somewhat in recent months, prompting the central bank to manage surplus liquidity through various instruments to maintain stability in money markets. The MPC reiterated its commitment to using all available tools to manage liquidity and ensure adequate credit flow to productive sectors of the economy.

Next MPC Meeting Scheduled for April 2026

The Monetary Policy Committee will convene again in April 2026 to review policy settings in line with evolving economic conditions. Until then, the central bank is expected to continue with its balanced approach, aiming to support growth while keeping inflationary pressures under check.

Long or Short, get news the way you like. No ads. No redirections. Download Newspin and Stay Alert, The CSR Journal Mobile app, for fast, crisp, clean updates!

App Store –  https://apps.apple.com/in/app/newspin/id6746449540 

Google Play Store – https://play.google.com/store/apps/details?id=com.inventifweb.newspin&pcampaignid=web_share