RBI keeps repo rate unchanged at 5.5%

RBI Repo Rate Unchanged: In a widely anticipated move, the Reserve Bank of India on Wednesday left the repo rate unchanged at 5.5 per cent, as the central bank struck a cautious note on inflation while expressing confidence in India’s medium-term growth prospects.

The decision, delivered unanimously by the six-member Monetary Policy Committee, comes amid growing concern over global tariff tensions and domestic price pressures that may resurface later this fiscal year.

“We believe the current policy rate remains consistent with supporting growth while keeping inflation expectations anchored,” said RBI Governor Sanjay Malhotra during the post-policy address. “The outlook for the Indian economy remains positive, though uncertainties—particularly on the external front—continue to evolve.”

Markets showed a subdued reaction. The Sensex slipped around 116 points, settling near 80,600, while the Nifty50 eased 50 points to 24,600. However, banking stocks went up with the Bank Nifty inching higher by 0.16 per cent, as Kotak Mahindra Bank, ICICI Bank, SBI, and Bank of Baroda saw an upward movement.

Bond traders took note of the RBI’s inflation commentary, sending the benchmark 10-year yield up by 3 basis points, reflecting a slightly hawkish interpretation of the statement.

While inflation has moderated in recent months, core inflation remains sticky around 4 per cent, and headline inflation is expected to inch higher in the final quarter of the fiscal, the Governor warned. That said, he reaffirmed that domestic demand remains healthy and growth is broadly tracking with the central bank’s estimates.

Interestingly, the RBI also acknowledged that the full effects of earlier rate cuts—totalling 100 basis points—are still filtering through the economy, suggesting policymakers are in no rush to pivot.