RBI MPC Retains 5.50% Repo Rate and Neutral Outlook

Press Release: 2025-2026/1217, Dated: 01.10.2025

1. Introduction

The Reserve Bank of India’s Monetary Policy Committee (MPC) concluded its three-day meeting held from September 29 to October 1, 2025. In its review, the MPC unanimously decided to keep the key policy repo rate unchanged at 5.50 per cent. This decision reflects the committee’s balanced approach to ensuring economic stability while addressing prevailing macroeconomic challenges.

2.Key Policy Rates Maintained

As part of the resolution, the Standing Deposit Facility (SDF) rate has been retained at 5.25 per cent. Similarly, the Marginal Standing Facility (MSF) rate and the Bank Rate continue to stand at 5.75 per cent. By keeping these benchmark rates steady, the MPC aims to provide consistency in the financial system, ensuring that lending and borrowing costs remain stable for banks, corporates, and consumers alike.

3. Rationale Behind the Decision

The MPC noted that while inflationary pressures have moderated, they continue to pose risks in the medium term. At the same time, India’s growth momentum needs sustained policy support to remain resilient amid global uncertainties. By maintaining a neutral policy stance, the committee seeks to strike a balance between controlling inflation within the RBI’s target band and encouraging economic activity.

4. Impact on Economy and Markets

The decision to hold the repo rate steady is expected to bring relief to borrowers, as lending rates are unlikely to increase in the near term. This stability may further support credit demand in sectors such as housing, infrastructure, and manufacturing. On the other hand, investors and market participants will view the MPC’s move as a signal of continuity, which can strengthen confidence in India’s economic outlook.

5. Conclusion

In summary, the MPC’s decision underscores its commitment to achieving its dual mandate of price stability and growth promotion. By maintaining the repo rate at 5.50 per cent and keeping allied rates unchanged, the committee has opted for a cautious yet growth-supportive approach. Moving forward, the MPC will closely monitor inflation trends, global developments, and domestic demand conditions to calibrate its policy stance as required.

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