Finance
RBI MPC Meeting 2026: As anticipated by the market, the Reserve Bank of India (RBI) raised the repo rate by 25 basis points (or 0.25%) on Wednesday. This marks the initial increase in the repo rate, the rate at which the central bank lends to commercial banks, since February 2023.
The monetary policy committee (MPC), led by Governor Sanjay Malhotra, made a unanimous decision to raise the repo rate from 5.25 percent to 5.5 percent. This occurs during increasing inflation, elevated oil costs, and a depreciated rupee.
In his MPC address, Malhotra said, “Global inflation is expected to rise. Trade uncertainty continues to linger. Global sentiment remains fragile. The impact of the Iran war could also disrupt trade and supply chains.”
However, he added that the Indian economy remains strong and is expected to stay resilient. “Rate cuts are off the table in the near term,” said the RBI governor.
RBI Raises GDP Growth Forecast
The increase in rates has occurred even with an improved growth forecast. The RBI has increased its real GDP growth prediction for the year to 7.1 percent, up from the previous 6.7 percent. The central bank indicated that economic activity has continued to show strength in the second quarter, spanning July through September.
Manufacturing has remained resilient in the face of cost challenges. The services sector continues to be stable and diverse. Investment in fixed assets is still holding up well. Private consumption and investment are projected to continue being major factors in driving growth. Net exports remain positive as well.
Nonetheless, there are a few vulnerabilities. The RBI identified weaknesses in non-durable goods and domestic air travel. Disruptions in the supply chain may also impact growth negatively. A weak monsoon and the chance of an El Nino occurrence might impact the Rabi season. Simultaneously, the demand in both rural and urban areas is anticipated to stay strong.
