RBI Holds Rates Steady Amid Tariff Concerns

Mumbai, Oct 1 (PTI) The Reserve Bank of India (RBI) on Wednesday kept its policy interest rate unchanged at 5.5 per cent for the second consecutive time, citing concerns over tariff uncertainties.

Announcing the fourth bi-monthly monetary policy of the current fiscal, RBI Governor Sanjay Malhotra said the Monetary Policy Committee (MPC) unanimously decided to keep the short-term lending rate or repo rate unchanged at 5.5 per cent with a neutral stance.

While GST rate rationalisation will have a sobering impact on consumption and growth, tariff related developments may slow down the economic expansion in the second half of the current fiscal, he said.

Since February 2025, the RBI has reduced the policy rate by 100 basis points. In its previous policy review in June, it had trimmed the repo rate by 50 basis points to 5.5 per cent.

The central bank has been tasked by the government to ensure that Consumer Price Index (CPI) based retail inflation remains at 4 per cent with a margin of 2 per cent on either side.

Based on the recommendation of the MPC, the RBI reduced the repo rate by 25 bps each in February and April, and 50 basis points in June amidst easing retail inflation.

The retail inflation is trending below 4 per cent since February this year. It eased to a six-year low of 2.07 per cent in August, aided by an easing of food prices and favourable base effect.