MUMBAI: RBI Governor Sanjay Malhotra announced on Wednesday that the monetary policy committee (MPC) has decided to keep the repo rate unchanged at 5.5 per cent, and stick to the “neutral” policy stance.
A neutral stance requires neither stimulation nor curbs on liquidity as it strikes a fine balance between controlling inflation without hurting growth.
The RBI Governor said that the outlook for inflation had become even more benign due to the sharp decline in food prices and the GST rate cuts. The RBI has, therefore, revised its average projection of the inflation rate to 2.6 per cent for 2025-26 from 3.1 per cent projected in August.
The monetary policy committee has revised the GDP growth rate projection to 6.8 per cent from 6.5 per cent earlier due to the robust growth outlook driven by domestic demand, support of a good monsoon and monetary policy easing and the GST rate cuts, Malhotra said.
The RBI Governor further stated that the monetary policy committee was sticking to the neutral stance as it was waiting for the earlier monetary policy easing was still playing out and trade related implications are unfolding.
“It would be prudent to wait for the policy actions to play out before charting out are next round of monetary policy actions, ” the RBI Governor said.