RBI MPC Keeps Rates Steady, Ups GDP, Cuts Inflation Outlook

New Delhi : The Reserve Bank of India (RBI) announced comprehensive reform-oriented decisions after its monetary policy committee (MPC) meeting. This meeting began on September 29 and concluded on Wednesday. As expected, the RBI MPC keeps rates steady amidst these decisions.

To maintain a balanced approach that supports economic momentum while also ensuring financial stability, the RBI decided to keep the repo rate unchanged at 5.50 per cent. This once again confirms that the RBI MPC keeps rates steady. Moreover, the decision highlights the central bank’s cautious optimism amid global uncertainties.

In addition, considering the momentum in domestic growth—driven by strong consumption, higher investments, and government spending—the RBI revised India’s GDP growth forecast for FY 2025-26 upwards to 6.8 per cent from the earlier estimate of 6.5 per cent. With supportive factors such as a good monsoon, GST 2.0 reforms, and improved credit flow, this revision reflects the RBI MPC’s strategic approach. Significantly, India’s real GDP grew 7.8 per cent in Q1 FY 2025-26, compared with 7.4 per cent in the previous quarter. This marked the fastest pace in seven quarters, fueled primarily by strong investment and consumption.

Furthermore, the RBI lowered its CPI inflation forecast for FY 2025–26 to 2.6 per cent, down from 3.1 per cent. Headline CPI inflation had already declined for nine consecutive months, reaching an 8-year low of 1.6 per cent in July 2025 before edging up to 2.1 per cent in August. Even with this slight increase, inflation remained comfortably within the RBI’s target range, which strengthens the case for steady rates.

Alongside these measures, the RBI also announced steps to facilitate wider use of the Indian Rupee and local currencies in international trade transactions. For instance, Authorised Dealer banks in India and their overseas branches may now lend in Indian currency to residents of Bhutan, Nepal, and Sri Lanka. These initiatives, coupled with the RBI MPC’s decision to keep the rates stable, reflect a forward-looking stance on global trade engagement.

Meanwhile, despite global trade uncertainty, India’s merchandise exports rose 2.5 per cent during April–August 2025, while imports grew 2.1 per cent. At the same time, services exports continued to post double-digit growth. Consequently, in Q1 FY 2025-26, real exports and imports of goods and services grew 6.3 per cent and 10.9 per cent, respectively. This further illustrates India’s robust external sector even as the RBI MPC keeps rates steady.

Finally, the governing body of banks observed economic activity from April–September FY 2025-26, with updates until September 26. During this period, Indian equity markets maintained an upward trajectory, reinforcing investor confidence. In conclusion, the RBI’s decision to keep rates unchanged provides much-needed balance—supporting growth while safeguarding stability.

–IANS