The MPC additionally determined to take care of the impartial coverage stance. RBI Governor Sanjay Malhotra famous that the affect of the 100 bps fee reduce since February 2025 on the financial system remains to be unfolding. “On steadiness, subsequently, the present macroeconomic situations, outlook and uncertainties name for continuation of the coverage repo fee of 5.5 per cent and look ahead to additional transmission of the front-loaded fee reduce to the credit score markets and the broader financial system,” Malhotra mentioned.
Here is what economists say about unchanged repo fee:
Madhavi Arora, Chief Economist, Emkay International Monetary Providers:
Regardless of sharply decreasing its inflation forecast to three.1% from 3.7% earlier, RBI's choice to maintain charges regular emanates from their give attention to one-year-ahead anticipated inflation that's wanting comfortably above 4%, whereas progress of their view has held up properly, regardless of international uncertainty. Nonetheless, specializing in one-year-ahead anticipated inflation seems more and more misplaced in an evolving world – notably as the worldwide panorama continues to shift towards a disinflationary bias in Asia. We expect going forward draw back dangers to progress could be more and more evident with new international resets and will nonetheless open up area for alleviating in the rest of the 12 months, although the Governor appears to have raised the bar greater for additional easing.
Upasna Bhardwaj, Chief Economist, Kotak Mahindra Financial institution:
The MPC's choice to maintain charges unchanged comes within the wake of worldwide uncertainties, whilst inflation stays benign and draw back dangers to progress persists. With inflation prone to development greater publish the close to time period beneficial developments, the bar for fee cuts forward is about very excessive. We are able to see some room for the final leg of easing provided that progress momentum slows considerably.
V Ok Vijayakumar, Chief Funding Strategist, Geojit Investments Restricted:
The MPC's unanimous choice to maintain the repo fee unchanged at 5.5% even whereas decreasing the CPI inflation forecast to three.1% for FY 26 from 3.7% earlier might be described as a ‘dowish pause.' Downtrending inflating within the backdrop of fine monsoon and Kharif sowing will hold inflation properly anchored enabling the MPC to go for an additional fee reduce on this fee reducing cycle. The RBI Governor's view that “we're ready for the transmission of front-loaded fee reduce” is the proper view below the current circumstances. This coverage of dovish pause whereas persevering with with the impartial coverage stance is sweet for the banking and different fee delicate sectors.
Garima Kapoor, Economist and Govt Vice President, Elara Capital:
Whereas recognizing uncertainties surrounding the geopolitical surroundings and awaiting the results of transmission of earlier fee cuts, RBI's MPC determined to maintain charges unchanged. On inflation entrance, regardless of 60bps undershooting of the inflation projection for FY26, RBI assessed this as largely led by risky meals gadgets. Although we anticipated MPC to chop charges amid hovering tariff associated uncertainties and easing inflation dynamics, at the moment's choice to take care of the pause can also be suggestive of MPC retaining its powder dry, ought to issues worsen on the commerce and tariff entrance.
Rajani Sinha, Chief Economist, CareEdge
RBI's choice to go away the charges unchanged was consistent with our expectations. Whereas inflation has fallen sharply in the previous few months, the Central Financial institution has reiterated that they'd be wanting on the inflation estimate for the quarters forward. We challenge CPI inflation to rise above 4% in This autumn FY26 and common above 4.5% in FY27, given the low base of this 12 months. This means that subsequent 12 months we're taking a look at an actual fee of curiosity within the vary of 1-1.5% and it may possibly even go decrease. This limits the scope of any additional fee reduce on this cycle. Even whereas highlighting the considerations across the exterior sector, the Central Financial institution has chosen to maintain the GDP progress projection for FY26 unchanged at 6.5%, marginally greater than our projection of 6.4%. Whereas the excessive tariff imposed by the US poses draw back dangers, now we have saved our progress forecast unchanged, on condition that the US commerce coverage remains to be very unsure. Furthermore, there are components like a wholesome monsoon, decrease inflation, and decrease revenue tax burden that may be supportive of progress this 12 months.
