RBI keeps repo rate steady at 5.5% after MPC review

The Reserve Bank of India (RBI) on Wednesday, October 1, kept the repo rate unchanged at 5.5% after its meeting on September 29-October 1, at which the Monetary Policy Committee (MPC) met. The MPC, headed by RBI governor Sanjay Malhotra, also decided to maintain its neutral stance.

The rate change aligns with analysts' expectations. This comes after the MPC slashed the repo rate by 100 basis points through three successive rate cuts from February.

The effects of the 100-basis-point rate cut since February 2025 are still developing. Given the current macroeconomic environment, outlook, and uncertainties, it is advisable to keep the policy repo rate steady at 5.5% and to observe how the initial rate cuts translate into the credit market and overall economy.

Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE, said, “The RBI MPC's decision to hold the repo rate at 5.5% reflects a measured approach ahead of the festive season, and amidst volatile global macroeconomic and policy conditions. Along with the recent GST cuts and range-bound inflation, the announcement is likely to lift consumer sentiment and may encourage greater demand across key sectors in the coming weeks. In real estate, it signals a steady growth outlook and reinforces market confidence, offering long-term predictability to developers and homebuyers. Going forward, we expect the consumption to improve and market momentum to accelerate further.”

Starting today, the RBI has introduced new guidelines to offer borrowers greater flexibility and broaden lending choices for banks. This initiative is part of the RBI’s strategy to enhance borrower advantages while providing banks with more flexibility, aiming to make credit more accessible without compromising the stability of the financial system.

Under the interest rate on advances directions, banks now have more flexibility to adjust parts of the interest spread on floating-rate loans without waiting three years. Borrowers can also choose to switch to a fixed interest rate during their loan reset, simplifying repayment management.

“Banks may reduce the other spread components for the benefit of the borrower earlier than three years. Banks may, at their discretion, offer the option to switch to a fixed rate at the time of reset,” the RBI notified on Monday.