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January 09, 2025
The RBI kept the repo rate steady at 5.5 per cent on Wednesday. The decision was taken at the end of the Monetary Policy Committee meeting.
Governor Sanjay Malhotra said the committee maintained a neutral stance. He noted that inflation had eased, but conditions abroad remain unstable. Tariff disputes and trade talks are ongoing. The rupee has also weakened after fresh tariff threats from the United States.
The RBI had reduced the rate three times earlier this year. There are 25 basis points each in February and April, followed by a 50-basis-point cut in June. Officials said the pause is intended to allow those reductions to be implemented and give banks time to adjust.
The RBI has kept its GDP growth forecast for FY26 at 6.5 per cent. It expects 6.5 per cent in the first quarter, 6.7 per cent in the second, 6.6 per cent in the third and 6.3 per cent in the fourth. Officials said the numbers indicate momentum is holding despite global risks.
On inflation, the RBI said prices are under control but may rise above 4 per cent in the final quarter of the fiscal year. Core inflation, which rose in June due to higher gold prices, is expected to remain just over 4 per cent for the year.
Amit Prakash Singh, Co-Founder of Square Yards, said, “For borrowers, this translates directly into a period of stability, with predictable EMIs and interest rates. This also provides the banking system a crucial window to transmit the benefits of previous rate reductions further.”
Analysts said the move shows caution in a challenging backdrop. Growth is steady and inflation is manageable. Keeping the repo rate at 5.5 per cent in August sends a clear signal to lenders and borrowers as global uncertainties unfold.
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