Archive · 5 Dec 2025
RBI Holds Repo Rate Amid Economic Uncertainty
The group that controls interest rates in India decided to keep them the same.
They did this because the world's economy is uncertain, and they want to be careful.
Food prices went up a little, but overall, prices are still low.
Some people think they should have lowered the rates, but others think keeping them the same is safer.
The group will meet again in December to decide what to do next.
MPC decided to hold the repo rate at 5.5% amid global economic uncertainty.
Inflation in August 2025 rose to 2.07% due to higher prices of vegetables, meat, and personal care items.
RBI revised its inflation projection for FY26 down to 2.6%.
GDP growth for Q1 FY26 was 7.8%, but Q4 is projected at 6.2%.
Analysts were divided, with some advocating for a 25 bps rate cut and others supporting the hold.
- Who
- Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI)
- What
- Decision to hold the repo rate at 5.5%
- When
- October 1, 2025
- Where
- India
- Why
- Due to global economic uncertainty, inflation trends, and growth projections
Rate Cut Advocates
Rate Hold Advocates
Rate Cut Necessity
Rate Cut Advocates
A 25 basis points rate cut is optimal due to low inflation and global rate cuts.
Rate Hold Advocates
Holding the rate steady is prudent due to global economic uncertainty and growth concerns.
Inflation Projections
Rate Cut Advocates
Significant downward revision in inflation forecast justifies a rate cut.
Rate Hold Advocates
Inflation trends are volatile; holding rates ensures stability.
- Repo Rate
- 5.5%
- FY26 Inflation Projection (Revised)
- 2.6%
- August 2025 Inflation Rate
- 2.07%
- Q1 FY26 GDP Growth
- 7.8%
- Q4 FY26 GDP Growth Projection
- 6.2%
- MPC Meeting Dates
- September 29-October 1, 2025
- Next MPC Meeting
- December 3-5, 2025
Sources
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