RBI holds repo rate at 5.5%, raises FY26 GDP outlook to 6.8% | Fusion - WeRIndia

RBI holds repo rate at 5.5%, raises FY26 GDP outlook to 6.8%

October 2, 2025   Finance Talk  
RBI holds repo rate at 5.5%, raises FY26 GDP outlook to 6.8%

The Reserve Bank of India (RBI) kept the repo rate steady at 5.5% in its October 2025 bi-monthly policy review.

RBI Governor Sanjay Malhotra announced that the Monetary Policy Committee (MPC) unanimously decided to maintain the rate. The policy stance also remains neutral.

Alongside the unchanged repo rate, the fixed reverse repo rate stays at 3.35%.

The Standing Deposit Facility (SDF) remains at 5.25%, and the Marginal Standing Facility (MSF) and bank rate at 5.75%.


The Cash Reserve Ratio (CRR) is unchanged at 3.75%, while the Statutory Liquidity Ratio (SLR) holds at 18%.

Importantly, the RBI revised its FY26 GDP growth forecast to 6.8%, up from 6.5%. Growth in Q2 is projected at 7%, followed by 6.4% in Q3 and 6.2% in Q4. Q1 of FY27 is expected to see 6.4% growth.

The RBI noted strong domestic demand, lower inflation, and a good monsoon as key growth drivers.

Meanwhile, the RBI lowered the FY26 inflation projection to 2.6%, from 3.1% earlier.

CPI inflation is estimated at 1.8% for Q2 and Q3, 4% for Q4, and 4.5% in Q1 FY27. The drop is mainly due to lower food prices and better supply conditions.

Malhotra also highlighted that recent reforms, including GST changes, will help offset global trade challenges.

In total, the RBI unveiled 22 reform measures covering banking, forex, insurance, and FEMA.

Key steps include allowing banks to fund corporate acquisitions and raising lending caps against shares to ₹1 crore.

IPO financing limits increased to ₹25 lakh. Additionally, RBI withdrew the 2016 framework, discouraging large corporate lending.

Consumer-focused changes include mobile and internet banking access for basic savings accounts.

The RBI also expanded the Ombudsman Scheme to rural cooperative banks.

To support rupee internationalisation, Indian banks can now lend in ₹ to non-residents in Bhutan, Nepal, and Sri Lanka for trade.

Transparent reference rates and investment options for SRVA balances were also announced.

Overall, the RBI aims to sustain growth momentum while maintaining price stability through calibrated reforms and steady policy support.

Image Credit: Anurag Vijay 03, CC BY-SA 4.0, via Wikimedia Commons

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Image Reference: https://commons.wikimedia.org/wiki/File:Reserve_Bank_Of_India_-_RBI_Mumbai.jpg

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