RBI Holds Repo Rate At 5.5%, Lifts FY26 Growth Outlook; Housing, Consumption To ...
The Reserve Bank of India (RBI) on Wednesday left the policy repo rate unchanged at 5.5 per cent and retained its stance at ‘neutral’, with governor Sanjay Malhotra signalling confidence in the economy’s growth momentum.The Monetary Policy Committee (MPC) voted unanimously to pause rates, opting to allow past policy measures to transmit before charting its next move.
Growth And Inflation Outlook
Suported by a 7.8 per cent GDP print in Q1 FY25, the central bank revised up its FY26 growth projection to 6.8 per cent from 6.5 per cent earlier. CPI inflation forecast for FY26 was cut to 2.6 per cent from 3.1 per cent.
Malhotra said GST rationalisation would temper inflation while boosting consumption and investment. “Domestic economic activity continues to sustain momentum even in Q2,” he added.
Impact On Housing And Real Estate
Developers and housing market watchers welcomed the move, citing stability for both buyers and builders.
“The RBI’s decision to keep the repo rate unchanged at 5.50 per cent in its August 2025 meeting brings much-needed stability to the housing market. For aspiring homeowners, it means EMIs remain manageable, keeping homeownership within reach. For developers, it supports sustained buyer interest and project planning,” said Rahul Singla, Director, Mapsko Group.
Sandeep Agarwal, Executive Director-Finance & Group CFO, Elan Group, said that while stability is positive, a rate cut could have spurred festive demand.
“The RBI’s decision reinforces economic stability which is valued by long-term investors. However, a rate cut ahead of the festive season could have provided a much-needed boost to homebuyer sentiment… In metropolitan markets, where ticket sizes are substantial, even a marginal cut can make luxury purchases more accessible and unlock significant demand,” he said.
Market And Investment Perspective
Most analysts said the pause was expected but noted the dovish undertone of the policy.
“MPC’s decision to keep the repo rate unchanged at 5.50 per cent with a ‘Neutral’ stance was largely in line with expectations, but the underlying message has significant implications. After a front-loaded 100 bps of rate cuts earlier this year and a CRR reduction, the central bank has now shifted to an assessment phase… The downward revision of FY26 CPI inflation to 2.6 per cent reflects growing confidence that price pressures are well-anchored. This creates room for further monetary accommodation later, potentially as early as the December meeting,” said Anil Rego, Founder and Fund Manager at Right Horizons PMS.
Rego added that equities, bonds and rate-sensitive sectors could benefit. “This pause coupled with dovish guidance is likely to be viewed positively. Autos, housing finance, real estate and consumption could see improved demand as lending rates stabilise.”
Meanwhile, Sonam Srivastava, Founder and Fund Manager at Wright Research PMS, said the RBI’s caution is warranted given global risks. “The MPC’s unanimous decision to hold the repo rate reflects a careful balance between sticky inflation risks and the need to support growth. With crude prices elevated, uneven monsoons, and global financial volatility, the RBI has chosen to stay cautious and data-driven… For markets, the status quo was largely priced in, but the tone of vigilance suggests rate cuts are unlikely before late 2025 or even 2026,” she said.
“The policy essentially opens the door for potential rate cuts in future and can be described as a dovish pause. Importantly, big reform measures for the banking sector — including a framework for M&A financing and financing against listed debt securities — will accelerate access to capital markets for acquisition financing as well as investment in fixed income and corporate bonds, with a funding framework in place in the near future,” said Vishal Goenka, Co-founder at IndiaBonds.com.
Global Caution
The governor flagged risks from sticky inflation in advanced economies, complicating global monetary policy. Still, he said that buoyancy in the services sector, supported by steady employment and improving domestic demand, would continue to underpin investment.
Pages:
[1]