New Delhi – The Reserve Bank of India (RBI) has decided to keep its key repo rate unchanged at 5.25%. The Monetary Policy Committee (MPC) took this decision unanimously after a three-day meeting. RBI Governor Sanjay Malhotra chaired the meeting and announced the outcome today.
This is the first policy review of 2026. The RBI had cut the repo rate by a total of 1.25% (125 basis points) in the previous easing cycle to support the economy. Now the central bank feels the time has come to pause and watch how things develop.
The policy stance remains “neutral”. This means the RBI can cut rates further if needed, or hold them steady, depending on future data.
Why Did the RBI Keep Rates Unchanged?
India’s economy is doing well right now. Growth is strong, inflation is low, and domestic demand is healthy. The RBI calls this a “Goldilocks” phase — not too hot, not too cold, just right.
Governor Malhotra said the Indian economy remains resilient. He highlighted that consumer price inflation has come down nicely, and GDP growth has beaten expectations in recent quarters.
The MPC looked at global uncertainties, oil prices, and the new India-US trade deal that has reduced tariffs. All these factors made the committee comfortable with holding rates steady for now.
New Growth and Inflation Forecasts
The RBI has raised its GDP growth forecast for the current financial year (FY26, April 2025 to March 2026) to 7.4% from the earlier 7.3%.
For the first half of next year (FY27), growth projections have also been revised upwards:
- Q1 FY27: 6.9%
- Q2 FY27: 7.0%
On inflation, the RBI now projects average CPI inflation for FY26 at 2.1% (slightly higher than the previous estimate of 2.0%). For the coming quarters it expects inflation to stay comfortable, around 4% in the first half of FY27.
These numbers show the RBI is confident that prices will remain under control while the economy keeps growing at a healthy pace.
Relief for Smaller NBFCs and Family Investment Pools
The RBI announced two important regulatory changes that will make life easier for smaller non-banking finance companies (NBFCs):
- NBFCs that do not take public deposits and have no direct customer interface, with assets up to ₹1,000 crore, will be exempted from mandatory registration with the RBI. This will reduce paperwork and compliance burden for many small family offices and investment entities.
- Certain NBFCs (especially those in gold loans) will no longer need prior RBI approval to open more than 1,000 branches. This will help big gold loan players like Muthoot and Manappuram expand faster.
Governor Malhotra said these steps are aimed at improving “ease of doing business” without compromising financial stability.
Good News for Digital Fraud Victims
In a big customer-friendly move, the RBI has proposed a new framework to compensate people who lose money in small-value digital frauds.
- Customers can get up to ₹25,000 as one-time compensation.
- This will come from the RBI’s Depositor Education and Awareness (DEA) Fund.
- The relief will be available even if the customer shared OTP by mistake, as long as there was no fraud on their part.
- It will be a one-time benefit per customer so that people become more careful in future.
This is expected to give relief to lakhs of people who lose small amounts in UPI scams, phishing, or fake calls every year.
How Stock Markets Reacted
Markets liked the decision. The Nifty 50 and Sensex closed higher today. Banking stocks and NBFC shares gained because lower rates for a longer period are good for lending business. The rupee also remained stable against the dollar.
Analysts said the unchanged rate and positive growth forecast removed uncertainty, which investors like.
What Does This Mean for Common People?
For Home Loan and Car Loan Borrowers Your EMI will not come down further right now. But since rates have already been cut by 1.25% in the last few months, your existing loans are cheaper than before. New borrowers will continue to get loans at current lower rates for some more time.
For Savings Account and Fixed Deposit Holders FD interest rates may stay around the present levels (6–7.5% for most banks). Do not expect big increases soon.
For Businessmen and Companies Borrowing cost remains low. This will help companies take fresh loans for expansion, especially in manufacturing and services.
For the Common Man Inflation is low, so the price of vegetables, milk, petrol and daily items is not rising fast. Jobs and business activity are expected to stay good.
What Experts Are Saying
Many economists welcomed the decision.
“The RBI has got the balance right. Growth is strong, inflation is benign, and the economy is in a sweet spot,” said one senior banker in Mumbai.
Another expert from a foreign bank said: “Holding rates now gives the RBI room to cut again later if global conditions worsen. The new fraud compensation scheme is a very practical step that will build trust in digital payments.”
Governor Malhotra himself said in the press conference: “Interest rates will remain at low levels for a long period of time and may go down even further if the situation demands.”
Background: How We Reached 5.25%
The RBI started cutting rates in 2025 when inflation came under control after the post-Covid period. The cumulative cut of 125 basis points has already made loans cheaper and supported economic recovery. Today’s pause shows the central bank believes the job is mostly done and now wants to see the full effect of earlier cuts.
What Could Happen Next?
The next MPC meeting is in April 2026. By then we will have new GDP numbers and a clearer picture of the global economy. If inflation stays low and growth remains strong, another small rate cut cannot be ruled out. But for now, the RBI wants to stay cautious.
FAQs
Q1. Will my home loan EMI reduce after today’s decision?
A: No. The repo rate is unchanged, so new EMIs and floating-rate loans will stay at current levels. But remember, rates are already much lower than last year because of previous cuts.
Q2. What is the repo rate and why does it matter?
A: The repo rate is the interest rate at which RBI lends money to banks for short periods. When it is low, banks can give cheaper loans to you.
Q3. Is inflation really under control?
A: Yes. The RBI expects average inflation of just 2.1% this year — well below the 4% target. Food and fuel prices have been stable.
Q4. Will fixed deposit rates fall further?
A: Not immediately. Banks may keep FD rates attractive to get deposits. But big increases are unlikely.
Q5. Who will get the ₹25,000 fraud compensation?
A: Anyone who loses up to ₹25,000 in small digital frauds (UPI, net banking, etc.). It is one-time only and will be paid quickly from RBI’s fund.
Q6. What is this Goldilocks phase everyone is talking about?
A: It means the economy is growing nicely (7.4%) while inflation is very low (2.1%). This ideal situation rarely lasts long, so the RBI wants to protect it.
Q7. Should I take a loan now or wait?
A: If you need a loan for house, car or business, current rates are attractive. Waiting may not bring much benefit in the near term.