Mumbai: The Reserve Bank of India (RBI) on Wednesday kept its policy interest rate unchanged at 5.5% for the second consecutive review, citing concerns over tariff uncertainties.
Announcing the fourth bi-monthly monetary policy of the current fiscal year, RBI Governor Sanjay Malhotra said the Monetary Policy Committee (MPC) unanimously decided to maintain the short-term lending rate, or repo rate, at 5.5% with a neutral stance.
He noted that while GST rate rationalisation could temper consumption and growth, ongoing tariff-related developments may slow economic expansion in the second half of the fiscal year.
Since February 2025, the RBI has lowered the policy rate by a total of 100 basis points. In its previous review in June, it had cut the repo rate by 50 basis points to 5.5%.
The central bank is mandated by the government to ensure that retail inflation, measured by the Consumer Price Index (CPI), remains at 4%, with a tolerance of plus or minus 2 percentage points. Following the MPC’s recommendations, the RBI had reduced the repo rate by 25 basis points each in February and April, and by 50 basis points in June, amid easing retail inflation.
Retail inflation has remained below 4% since February 2025, dropping to a six-year low of 2.07% in August, driven by easing food prices and a favourable base effect.
