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The Reserve Bank of India (RBI) has maintained its benchmark repo rate at 5.50% after implementing cumulative cuts of 100 basis points earlier this year. Starting from 6.50%, the central bank reduced the rate in multiple steps to support economic growth amid stable inflation. While inflation projections have eased and liquidity has improved, the RBI has now paused further easing, keeping its stance neutral. The impact of rate cuts on lending rates has been slow, and global uncertainties, including trade tensions, are adding new challenges to the economic outlook.
The Reserve Bank of India has decided to keep the repo rate unchanged at 5.50% following a series of rate cuts earlier this year. The central bank had lowered the rate in phases first to 6.25%, then to 6.00%, and finally to 5.50% between January and June. These reductions, totaling 100 basis points, were aimed at supporting domestic demand and ensuring liquidity in the system as inflation remained within manageable levels. Advertisement
Alongside the repo rate changes, the RBI also adjusted other key rates. The reverse repo rate, bank rate, and marginal standing facility (MSF) were aligned accordingly. The cash reserve ratio (CRR) was also brought down by 100 basis points to 3%, enhancing banking sector liquidity and credit availability. These policy steps were taken to ease financing conditions, particularly for housing, small businesses, and infrastructure sectors.
During the latest monetary policy meeting, the RBI's Monetary Policy Committee (MPC) voted to hold the repo rate steady. The central bank revised its inflation forecast for FY26 downward from 3.7% to 3.1%, citing easing food and fuel prices. Retail inflation in recent months has remained well below the RBI's upper tolerance limit of 6%, strengthening the case for a pause in rate adjustments. However, the MPC highlighted external uncertainties such as volatility in crude oil prices and the potential impact of new U.S. tariff barriers as key risks to the inflation and growth outlook.
Mr. Prashant Sharma, President, NAREDCO Maharashtra, noted that RBI's decision to maintain the repo rate despite easing inflation reflects a cautious yet balanced approach to managing global headwinds and domestic stability. He said the status quo on rates helps sustain positive homebuyer sentiment and housing affordability. However, he added that with moderating inflation and macroeconomic uncertainties, the real estate industry hopes for a calibrated rate cut in future reviews, particularly to support the affordable and mid-income housing segments.
From an economic standpoint, RBI Governor Sanjay Malhotra indicated that the current stance remains neutral, and future actions will be data-driven. He noted that while monetary policy has supported growth, the transmission to actual lending rates is still lagging. Borrowers haven't seen substantial EMI reductions yet, as banks are adjusting gradually to the changed cost of funds.
Mr. Payas Agarwal, Director, Great Value Realty, said that the RBI's decision signals a balanced and supportive macroeconomic setup. With headline inflation at a 77-month low and GDP projections holding firm, consumer confidence and purchasing power are expected to rise. He highlighted that this directly supports home affordability and long-term investments in the sector. He also expressed optimism that this economic environment will drive housing demand across residential and commercial verticals in the coming quarters.The central bank has tilted policy toward growth, though it remains cautious to preserve monetary flexibility.
Mr. Vikas Jain, CEO, Labdhi Lifestyle and President, NAREDCO Maharashtra NextGen, acknowledged that maintaining the repo rate ensures monetary stability. However, he pointed out that the sector was expecting a rate cut due to the significant fall in inflation to 2.1%. He explained that affordable housing and first-time homebuyers are highly sensitive to interest rate changes, and a cut could have accelerated housing demand. He added that the industry remains hopeful the RBI will consider easing rates in the upcoming cycles to promote broader sectoral and economic growth.
Equity markets reacted cautiously to the pause, with both Sensex and Nifty ending lower amid concerns over external risks and a potential slowdown in global trade. At the same time, the RBI maintained its GDP growth projection at 6.5% for FY26, reflecting confidence in domestic consumption and investment recovery.
In a broader context, this year's rate-cut cycle follows a long phase of policy stability. From May 2022 to December 2024, the repo rate was kept at 6.50%, after a rapid hike cycle during the post-COVID inflation surge. The ongoing easing, initiated under Governor Malhotra's leadership, marks a return to growth-focused policy, though the RBI remains cautious about inflationary pressures returning.
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