The Reserve Bank of India's Monetary Policy Committee has left its benchmark repurchase rate on hold at 5.50 percent at its policy review held today, in line with the consensus forecast. Officials have cut this rate by 100 basis points since the start of the year after the rate had been left on hold for two years.

Data released since the RBI's previous meeting in August have shown headline CPI inflation remains contained, easing from 2.1 percent in June to 1.61 percent in July before picking back up to 2.07 percent in September, back within the RBI's target range of two percent to six percent. This decline aligns with expectations and is primarily driven by subdued food price pressures. PMI survey data continue to indicate robust economic activity, although industrial production growth has shown signs of moderation.

In the statement accompanying today's decision, RBI officials noted that favorable monsoon conditions had lowered food price inflation and kept headline inflation low. With the inflation outlook now more benign, officials have revised their inflation forecast for the current fiscal year downward from 3.1 percent to 2.6 percent. While acknowledging risks from global trade tensions, officials remain optimistic about domestic resilience, underpinned by strong consumption demand, and supportive fiscal measures. They project GDP growth of 6.8 percent for this fiscal year.

Reflecting this outlook, officials decided to maintain current policy settings, stating that it is"prudent to wait for the impact of policy actions to play out and greater clarity to emerge before charting the next course of action. The policy stance remains"neutral".

The RBI is ex rates on hold as it watches the impact of past rate cuts for the rest of 2025.

The Reserve Bank of India (RBI) issues six Bi-monthly Policy Statements a year. During these announcements the RBI will signal any shifts in its monetary stance, particularly with reference to the benchmark repo interest rate and its cash reserve ratio (CRR). The Governor will also update the Bank's view of recent economic developments and provide new forecasts for inflation and growth. A 4 percent inflation target with a +/- 2 percentage point tolerance band was formally implemented in August 2016 and will be overseen by a new six-member Monetary Policy Committee (MPC).

Although the RBI monitors many economic indicators - as indeed all central banks do - the RBI most closely monitors inflation. The level of interest rates affects the economy. Higher interest rates tend to slow economic activity while lower interest rates stimulate economic activity. Either way, interest rates influence the sales environment. In the consumer sector, fewer homes or cars will be purchased when interest rates rise. Furthermore, interest rate costs are a significant factor for many businesses, particularly for companies with high debt loads or for those who have to finance high inventory levels. This interest cost has a direct impact on corporate profits. The bottom line is that higher interest rates are bearish for the financial markets, while lower interest rates are bullish.

The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934. The Central Office of the Reserve Bank was initially established in Calcutta but was permanently moved to Mumbai in 1937. The Central Office is where the Governor sits and where policies are formulated. Though originally privately owned, since nationalization in 1949, the Reserve Bank is fully owned by the Government of India. The Reserve Bank's affairs are governed by a central board of directors. The board is appointed by the Government of India in keeping with the Reserve Bank of India Act.

The Reserve Bank of India performs this function under the guidance of the Board for Financial Supervision (BFS). The Board was constituted in November 1994 as a committee of the Central Board of Directors of the Reserve Bank of India. Primary objective of BFS is to undertake consolidated supervision of the financial sector comprising commercial banks, financial institutions and non-banking finance companies. Its function is to advise the Central Board on local matters and to represent territorial and economic interests of local cooperative and indigenous banks; to perform such other functions as delegated by Central Board from time to time. Primary objective of BFS is to undertake consolidated supervision of the financial sector comprising commercial banks, financial institutions and non-banking finance companies. The Board is required to meet normally once every month. It considers inspection reports and other supervisory issues placed before it by the supervisory departments.