RBI keeps repo rate unchanged at 5.5%
What's the story
The Reserve Bank of India (RBI) has kept its key repo rate unchanged at 5.5%, as expected by the market. The decision comes as the central bank assesses the impact of previous rate cuts and recent tax reductions against a backdrop of global trade uncertainties. The six-member Monetary Policy Committee (MPC) unanimously voted to maintain the key repo rate and continue with a "neutral" policy stance.
Economic indicators
Inflation outlook improved due to lower food prices
The MPC noted that the inflation outlook has improved due to lower food prices and tax rate cuts. India's annual inflation rose to 2.07% in August as food prices increased but remained near the lower end of the central bank's tolerance band of 2%-6%. Despite stronger-than-expected economic growth of 7.8% in April-June quarter, economists expect a slowdown in subsequent quarters due to US tariffs on Indian imports.
Policy continuity
SDF rate remains unchanged at 5.25%
RBI Governor Sanjay Malhotra decision today follows the same approach taken in August and marks the second consecutive pause after three consecutive rate cuts worth 100 basis points across February, April, and June. The standing deposit facility (SDF) rate under liquidity adjustment facility (LAF) remains unchanged at 5.25%, while marginal standing facility (MSF) rate and Bank Rate remain at 5.75%.