RBI Maintains Interest Rate Amid Economic Concerns: What It Means for You

RBI Holds Steady on Interest Rates

Mumbai: The Reserve Bank of India (RBI) has decided to keep its policy interest rate steady at 5.5 percent for the second consecutive meeting, citing ongoing concerns regarding tariff fluctuations.

During the announcement of the fourth bi-monthly monetary policy for the fiscal year, RBI Governor Sanjay Malhotra stated that the Monetary Policy Committee (MPC) reached a unanimous agreement to maintain the repo rate at 5.5 percent, adopting a neutral approach.

Malhotra noted that while the rationalization of GST rates could dampen consumption and growth, developments related to tariffs might hinder economic growth in the latter half of the fiscal year.

Since February 2025, the RBI has lowered the policy rate by a total of 100 basis points. In the previous review conducted in June, the repo rate was cut by 50 basis points to the current level.

The government has tasked the central bank with keeping the Consumer Price Index (CPI) based retail inflation around 4 percent, allowing for a margin of 2 percent on either side.

Following the MPC's recommendations, the RBI had previously reduced the repo rate by 25 basis points in both February and April, and by 50 basis points in June, as retail inflation showed signs of easing.

Retail inflation has remained below 4 percent since February, reaching a six-year low of 2.07 percent in August, largely due to declining food prices and a favorable base effect.