RBI maintains repo rate at 5.5% for second consecutive time

The Reserve Bank of India (RBI) kept its key repo rate unchanged at 5.50% on Wednesday, matching market expectations as the central bank takes stock of the impact of previous rate cuts and recent tax reliefs, all against a backdrop of global trade uncertainty.

The RBI had already reduced the repo rate by 100 basis points earlier this year but opted to pause at its August meeting. The Monetary Policy Committee (MPC) voted unanimously to maintain the current rate and stick with a neutral policy stance.

A recent Reuters poll had anticipated the hold, though a few economists flagged low inflation and slowing growth as reasons the RBI might consider further easing.

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RBI Governor Sanjay Malhotra said inflation pressures have eased, thanks to falling food prices and recent tax cuts. He added that the outlook for growth remains stable.

Inflation in August came in at 2.07%, edging up slightly due to food costs but still near the lower end of the RBI’s 2–6% comfort zone, giving the central bank room to maneuver if needed.

India’s economy posted strong 7.8% year-on-year growth in the April–June quarter. However, analysts expect the pace to cool in the months ahead, partly due to the impact of steep US tariffs—up to 50%—on Indian goods. Even so, tax reductions on a range of consumer products could help keep domestic demand buoyant.

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