RBI Policy Meeting 2025: Key highlights and governor Sanjay Malhotra’s major announcements
Oct 1, 2025
Synopsis
The RBI kept the repo rate at 5.5% with a neutral stance, citing low inflation and strong GDP growth of 7.8% in Q1:2025-26. Moderate inflation, a good monsoon, and GST reforms support the economy, while global uncertainties and trade risks may affect growth in H2:2025-26.
The Reserve Bank of India (RBI) in its latest monetary policy review has kept the policy repo rate unchanged at 5.5%, citing moderation in inflation and resilient economic growth. The decision was taken during the 57th meeting of the Monetary Policy Committee (MPC) held from 29 September to 1 October 2025 under the chairmanship of RBI Governor Sanjay Malhotra.
Here are the key highlights of the RBI policy announcement:
Monetary Policy Committee Decides to Keep Repo Rate Unchanged at 5.5% With Neutral Stance to Support Growth
MPC voted unanimously to maintain the repo rate at 5.5%, the standing deposit facility (SDF) rate at 5.25%, and the marginal standing facility (MSF) and bank rate at 5.75%.
The committee decided to retain a neutral stance, though two members suggested changing it to accommodative.
This decision reflects a cautious approach, allowing previous policy measures and fiscal reforms to impact the economy before further adjustments.
India’s Economic Growth Remains Strong in Q1:2025-26 Supported by Private Consumption and Investment
Real GDP grew by 7.8% in Q1:2025-26, driven by strong private consumption and fixed investment.
Gross value added (GVA) grew by 7.6%, led by manufacturing revival and steady expansion in services.
Rural demand remains robust due to a good monsoon and strong agriculture output, while urban demand is gradually recovering.
Construction indicators, including cement production and steel consumption, point to sustained investment activity despite moderation in capital goods production and imports.
Inflation Trends Show Significant Moderation With Headline CPI at 2.1% in August 2025
Headline CPI inflation rose slightly to 2.1% in August after hitting an eight-year low of 1.6% in July 2025.
Food prices have remained benign due to a sharp decline in inflation since October 2024.
Core inflation is contained at 4.2%, or 3.0% excluding precious metals.
The impact of GST rate rationalisation and adequate food stocks is expected to keep inflation low during H2:2025-26.
RBI Projects GDP Growth at 6.8% for 2025-26 With Risks Evenly Balanced Despite Global Uncertainty
Real GDP for 2025-26 is projected at 6.8%, with quarterly growth expected at Q2:7.0%, Q3:6.4%, Q4:6.2%.
Q1:2026-27 GDP growth is projected at 6.4%.
Upside drivers: above-normal monsoon, good kharif sowing, steady employment, rationalised GST rates, and rising capacity utilisation.
Downside risks: global policy uncertainty, trade and tariff developments, geopolitical tensions, and financial market volatility.
Rationale Behind RBI’s Decision to Hold Repo Rate Amid Benign Inflation and Moderating Growth
Moderate inflation and contained core inflation have created room for policy to support growth.
MPC observed that front-loaded monetary policy measures and recent fiscal reforms are still influencing the economy.
Trade-related uncertainties are ongoing, prompting caution before any further rate adjustments.
Despite resilient growth, external risks and tariff concerns may affect the outlook for H2:2025-26 and beyond.
Key Takeaways for Businesses, Investors, and Consumers From RBI’s Monetary Policy Announcement
Borrowing costs remain stable, supporting investment and credit growth.
Inflation-friendly environment may boost consumer spending and rural demand.
GST rationalisation expected to reduce prices for several goods, benefiting households.
Policymakers are balancing growth support with inflation control, maintaining flexibility for future policy actions.
Important Dates to Remember:
Minutes of the 57th MPC meeting will be published on 15 October 2025.
The next MPC meeting is scheduled for 3-5 December 2025.
[The Economic Times]
