Updates on RBI Policy

• Repo Rate: The policy repo rate remains unchanged at 5.50%, consequently, the Standing Deposit Facility (SDF) rate stays at 5.25%, and the Marginal Standing Facility (MSF) rate are held at 5.75%.
• Stance: The MPC has chosen to continue with a "neutral" stance, indicating a readiness to respond to evolving economic dynamics. The decision to pause follows a period of significant front-loaded rate cuts, and the committee is now waiting for the full transmission of these measures to the broader economy and credit markets.
• Inflation: The RBI has revised its inflation forecast for FY26 downwards. The CPI inflation projection has been lowered to 3.1% from the previous estimate of 3.7% in June 2025. However, the RBI anticipates that inflation will gradually rise towards the end of the fiscal year due to seasonal trends and base effects, projecting it to reach 4.4% in Q4 FY26 and further to 4.9% in Q1 FY27.
• GDP Growth: The RBI has retained its projection for GDP growth for FY26 at 6.5%. The central bank acknowledged that while the economy holds "bright prospects, there are uncertainties, such as fresh tariff threats, that warrant close monitoring.

                                                                                 RBI inflation revised estimates for FY26