The Reserve Bank of India (RBI) has provided relief to ordinary citizens and borrowers. It made the important decision to leave interest rates unchanged at its third bimonthly monetary policy review meeting of the current fiscal year. Therefore, the key repo rate has been kept stable at 5.25 percent. RBI Governor Sanjay Malhotra announced this at a press conference today. This decision will not result in any increase or decrease in EMIs for home, car, or personal loan borrowers.
Speaking at a press conference, Governor Sanjay Malhotra stated that the Monetary Policy Committee (MPC) held its third bimonthly meeting of the current fiscal year on August 3, 4, and 5 to discuss and decide on the policy repo rate. Uncertainty and developments in the international market have put pressure on inflation. Rising fuel prices and climate change are driving up retail and wholesale inflation. He stated that keeping interest rates stable is essential to address these challenges and maintain balance in the economy.
Retail inflation is higher than expected. Headline inflation will rise further, primarily due to food and fuel prices, and will peak in the third quarter of FY27, after which it will ease. Malhotra said that except for precious metals, inflation is under control and in line with earlier estimates.
The RBI revised its GDP growth forecast for FY26-27 to 6.7 percent from the previous 6.6 percent. Furthermore, the GDP growth forecast for the first quarter (Q1) of FY27 has been raised to 7 percent from 6.6 percent, while the second quarter (Q2) estimate has been raised to 6.4 percent from 6.3 percent.
According to financial experts, retail inflation (CPI) is expected to hover around 4.9 percent this year. Given the tightening monetary policies of central banks worldwide, the RBI will likely proceed cautiously in the coming months. According to Maulik Patel, head of research at Equirus Securities, the RBI may raise the repo rate by 25 basis points (0.25%) in its monetary policy review in December.