The central bank has prioritized inflation control while
maintaining its economic growth forecast, signaling stability for loan EMIs in
the near term.
Mumbai, India – The Reserve Bank of India's (RBI)
Monetary Policy Committee (MPC) announced today, October 3, 2025, that it will
keep the benchmark policy repo rate unchanged at 6.50%. This marks the
fourth consecutive meeting where the six-member committee has decided to hold
rates, indicating a cautious "wait-and-watch" approach.
The decision was widely expected by economists and market
analysts. The MPC remains focused on bringing inflation down to its 4% target
while ensuring that the economic growth momentum is sustained.
Key Highlights from the Announcement
- Repo
Rate: Unchanged at 6.50%.
- Policy
Stance: The MPC has maintained its stance of "withdrawal of
accommodation" to ensure inflation progressively aligns with the
target.
- Inflation
Forecast: The RBI has retained its CPI inflation forecast for the
fiscal year 2025-26 at 5.4%, citing risks from volatile food prices
and uncertain global conditions.
- GDP
Growth: The real GDP growth forecast for 2025-26 is also kept
unchanged at a robust 6.5%.
Why Did the RBI Hold Rates?
Speaking at the press conference, RBI Governor Shaktikanta
Das emphasized that the job on the inflation front is not yet finished.
"While core inflation has softened, headline inflation remains vulnerable
to recurring food price shocks," he stated.
The central bank is performing a delicate balancing act. On
one hand, high interest rates are needed to control rising prices. On the other
hand, raising rates further could slow down the strong economic growth India is
currently experiencing. By holding the rates steady, the RBI is choosing
stability and allowing the effects of its previous rate hikes to continue
working through the economy.
What This Means for You ????????
This decision has a direct impact on your finances,
especially if you have loans or are planning to invest.
- Loan
EMIs: For borrowers with floating-rate home loans, car loans, or
personal loans, this is good news. Your Equated Monthly Instalments (EMIs)
are not likely to increase in the immediate future as they are
linked to the repo rate.
- Fixed
Deposits (FDs): Interest rates on FDs are expected to remain stable
and attractive. Banks are unlikely to revise their FD rates downwards
until the RBI signals a rate cut.
- Stock
Market: The stock market reacted positively to the announcement, as
the decision was in line with expectations and removed any immediate
uncertainty. The BSE Sensex and NSE Nifty saw a brief surge following the
governor's speech.
Looking ahead, the RBI will continue to monitor domestic
inflation and global economic trends closely before making any changes to its
policy. Experts believe that any potential rate cuts are unlikely before the
middle of next year.
