RBI MPC 5 Key Highlights: Repo Rate Unchanged, Stance Neutral, Sharp Cut In Inflation Projection & More
The governor noted that the 100 basis point rate cut impact since February is still unfolding on the economy.
Reserve Bank of India Governor Sanjay Malhotra announced the Monetary Policy Committee's decision to keep the repo rate unchanged on Wednesday at 5.5%. The decision was taken unanimously by all members of the committee.
The governor said that the impact of the 100 basis point rate cut implemented in February is still percolating down in the economy.
Below are five key highlights from the MPC Meet
Repo Rate Unchanged
The RBI Monetary Policy Committee decided to unanimously keep the repo rate unchanged at 5.5%, Governor Malhotra said. The MPC also decided to keep the stance neutral.
"The RBI took decisive, forward looking measures to support growth. MPC voted unanimously to keep policy rate unchanged. Repo rate kept at 5.5%. MPC decided to continue with neutral stance," said Malhotra.
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Cut In Inflation Projection
The RBI governor said headline inflation is lower because of volatile food prices and inflation is projected to only go up from last quarter of the current financial year.
He noted that FY26 inflation is seen at 3.1%, CPI inflation in Q2 seen at 2.1%, Q3 at 3.1%, and Q4 at 4.4% and CPI inflation in Q1 FY27 seen at 4.9%
Growth Forecast Robust
Governor Malhotra said domestic growth is holding up, broadly evolving along lines of the central bank's assessment.
The central bank forecasts Q1 GDP growth at 6.5%, Q2 at 6.7%, Q3 at 6.6% and Q4 at 6.3%and Q1 FY27 GDP growth likely at 6.6%
"Some high-frequency indicators showed mixed signals. Rural consumption is showing revival. Fixed investment supported by buoyant government capex is supporting economic activity. Steady monsoon is supporting Kharif sowing, bolstering reservoir levels," the central bank governor said.
Liquidity Surplus
At the policy meet address, the governor also said there is ample liquidity in the system. As of Aug 1 forex reserves stood at $688.9 billion, sufficient to cover more than 11 months of merchandise imports.
Malhotra also noted that bank credit grew at 12.1% in FY25 and it was higher than the average of the past 10 years in FY25
Headwind By Global Uncertainty
The governor noted that global trade challenges continue to linger, but over the medium term, the Indian economy holds bright prospects. However, he noted that globally, policymakers are faced with muted growth, slowing inflation.
Turning a little cautious given the macro environment, the governor said the policymakers will have a tough task navigating a world characterised by muted growth, sticky inflation. He, however, maintained that domestic growth is on the lines of the RBI's assessment.
