On Wednesday, October 1, the Reserve Bank of India’s Monetary Policy Committee (MPC) opted to keep the benchmark interest rate unchanged at 5.5%, marking a second straight pause following three successive rate cuts totaling 100 basis points earlier this year, in February, April, and June.
The decision to keep interest rates steady was reached unanimously by the six-member committee, which also reaffirmed its commitment to a "neutral" monetary policy stance, indicating flexibility in future rate actions depending on evolving economic conditions. In line with the status quo on the repo rate, the RBI also left the Standing Deposit Facility (SDF) rate and the Marginal Standing Facility (MSF) rate unchanged.
Commenting on the economic outlook, RBI Governor Sanjay Malhotra highlighted robust first-quarter growth and a softening inflation trend as encouraging signs for the domestic economy. He also noted that the global economy has shown greater resilience than previously expected, lending additional support to India’s economic momentum.
In a significant move, the RBI raised its GDP growth forecast for the full financial year 2025–26 (FY26) to 6.8%, up from the earlier estimate of 6.5%.
Quarter-wise, the GDP projection for Q2 FY26 has been revised upward to 7.0% from 6.7%, while forecasts for Q3 and Q4 have been slightly trimmed to 6.4% (from 6.6%) and 6.2% (from 6.3%), respectively. For Q1 of FY27, growth is now expected to be in the range of 6.4%–6.6%, slightly lower than earlier projections.
RBI Governor Sanjay Malhotra noted in his post-policy address that while the Indian economy continues to show resilience with strong Q1 performance and moderating inflation, tariff-related uncertainties could weigh on growth in the second half of the current financial year.
Also Read: Govt Keeps PPF, NSC, Sukanya Samriddhi, KVP Rates Unchanged for Oct-Dec FY26
In a positive signal for consumers and businesses, the RBI also revised its projection for average headline inflation in FY26 downward to 2.6%, compared to the earlier forecast of 3.1%, reflecting easing price pressures.
Governor Malhotra added that global economic conditions have remained more resilient than expected, providing a relatively stable external backdrop for India’s growth.
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Published on: Oct 1, 2025, 10:22 AM IST
Sachin Gupta
Sachin Gupta is a Content Writer with 6+ years of experience in the stock market, including global markets like the US, Canada, and Australia. At Angel One, Sachin specialises in creating financial content that simplifies complex market trends. Sachin holds a Master's in Commerce, specialising in Economics.
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