Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday announced that the Monetary Policy Committee (MPC) unanimously decided to keep the policy rate unchanged at 5.5 per cent, continuing the neutral stance.
The standing deposit facility (SDF) rate under the liquidity adjustment facility (LAF) remains unchanged at 5.25 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 5.75 per cent.
On GDP growth, the RBI Governor said the projection for real GDP growth for 2025-26 has been retained at 6.5 per cent, with Q1 at 6.5 per cent, Q2 at 6.7 per cent, Q3 at 6.6 per cent, and Q4 at 6.3 per cent. Real GDP growth for Q1 of 2026-27 is projected at 6.6per cent.
Further, he told the CPI headline inflation declined for the eighth consecutive month to a 77-month low of 2.1 per cent (y-o-y) in June 2025. “This was driven primarily by a sharp decline in food inflation led by improved agricultural activity and various supply-side measures. Food inflation recorded its first negative print since February 2019 at (-) 0.2per cent in June,” the Governor said.
Core inflation, which remained within a narrow range of 4.1-4.2 per cent during February-May, increased to 4.4 per cent in June, driven partly by a continued increase in gold prices, the Governor highlighted.
He also said the CPI inflation, however, is likely to edge up above 4 per cent by Q4:2025-26 and beyond, as unfavourable base effects and demand-side factors from policy actions come into play.
Giving the projections, he said, the CPI inflation for 2025-26 is now projected at 3.1 per cent with Q2 at 2.1 per cent; Q3 at 3.1 per cent; and Q4 at 4.4 per cent. CPI inflation for Q1:2026-27 is projected at 4.9per cent, the Governor said.
He also said the CPI inflation is likely to edge up above the 4 per cent target from Q4:2025-26 onwards.
“Domestic growth remains resilient and is broadly evolving along the lines of our assessment,” he said.
Private consumption, aided by rural demand, and fixed investment, supported by buoyant government capex, continue to boost economic activity. On the supply side, a steady south-west monsoon is supporting kharif sowing, replenishing reservoir levels, and boosting agricultural activity. Moreover, the services sector and construction activity remain robust.
However, growth in the industrial sector remained subdued and uneven across segments, pulled down by electricity and mining, he highlighted.