India Holds Rates, Revises Up FY25/26 GDP Forecasts

The Reserve Bank of India (RBI) maintained its key repo rate at 5.25% during its February 2026 meeting, the first monetary policy decision of the year, after cutting it by 25 bps at the December meeting, in line with forecasts, amid confidence in a softer inflation outlook and improving growth prospects. India’s annual inflation accelerated to 1.33% in December 2025 but remained below the RBI’s tolerance band of 2%–6%, while GDP grew 8.2% in the September quarter. The decision comes after the Union Budget boosted government spending and US–India trade deals raised expectations of stronger economic growth. On the economic outlook, the RBI raised its GDP growth forecast for FY2025/26 to 7.4%, up from its earlier estimate of 7.3%. GDP growth for H1 of FY27 was also revised upward, with growth projected at 6.9% in Q1 and 7.0% in Q2. Meanwhile, inflation for FY2025/26 is projected at 2.1%. The RBI also kept the SDF rate at 5.0% and the MSF rate at 5.50%.

The Reserve Bank of India (RBI) lowered its key repo rate by 25 bps to 5.25% during its December 2025 meeting, in line with forecasts amid confidence in a softer inflation outlook. The RBI has now cut rates by a total of 125 bps since the beginning of the year, bringing the repo rate to its lowest level since July 2022. The central bank also announced open market operations worth INR 1 trillion (USD 11.14 billion) to buy bonds this month, along with an additional USD 5 billion in forex swaps to inject liquidity into the banking system and speed up the transmission of lower rates. On the economic outlook, the RBI raised its GDP growth forecast for FY2025/26 to 7.3%, up from its earlier estimate of 6.8%. Meanwhile, headline inflation was revised down to 2.0% from 2.6%, keeping it well within the central bank’s 2%–6% target range. The RBI also cut the Standing Deposit Facility (SDF) and Marginal Standing Facility (MSF) rates by 25 bps, bringing them to 5.0% and 5.50%, respectively.

The Reserve Bank of India (RBI) kept its key repo rate unchanged at 5.50% during its October 2025 meeting, in line with market expectations. The decision comes amid easing inflation, as the central bank assesses the impact of earlier rate cuts and recent tax reductions, against a backdrop of global trade uncertainties. The repo rate remains at its lowest level since August 2022, following a cumulative 100 basis point reduction since the beginning of the year. On the economic outlook, the RBI raised its GDP growth forecast for FY2025/26 to 6.8%, up from a previous estimate of 6.5%, with Q2 at 7.0%, Q3 at 6.4%, and Q4 at 6.2%. Meanwhile, headline inflation projections were revised down to 2.6% from 3.1%, keeping it well within the central bank’s 2%–6% target range. Core inflation was reported at 4.2%. The RBI also held the Standing Deposit Facility (SDF) and Marginal Standing Facility (MSF) rates steady at 5.25% and 5.75%, respectively.