RBI retains repo charge unchanged at 5.5%; maintains ‘impartial’ coverage stance

RBI Repo Charge Unchanged: The Reserve Financial institution of India on Wednesday saved the benchmark repo charge unchanged at 5.5 per cent, because the Financial Coverage Committee struck a balanced tone between softening inflation and resilient financial development. The choice unanimously backed by all six MPC members was extensively anticipated, although the central financial institution’s lowered inflation forecast and cautious development optimism set the tone for markets and currencies alike.

Governor Sanjay Malhotra, talking after the coverage announcement, reiterated the central financial institution’s ‘impartial’ stance, signalling flexibility in future strikes. “We proceed to see encouraging momentum in home exercise, although exterior headwinds stay,” he mentioned, citing ongoing international commerce uncertainties and capital movement volatility.

In response, the fairness markets moved decrease. The BSE Sensex dropped 116 factors, close to 80,600, whereas the Nifty50 misplaced 50 factors at 24,600. Broader market sentiment skewed bearish notably within the small-cap area, the place the Nifty Smallcap100 declined 1.07 per cent, dragged down by names like Reliance Energy, Kaynes Expertise, and PG Electroplast, every down over 4 per cent.

Rupee Strengthens, Bond Yields Edge Larger

Whereas equities faltered, the Indian rupee gained 10 paise, buying and selling at 87.70 to the greenback as per Bloomberg knowledge. In the meantime, bond yields rose modestly, with the 10-year benchmark yield up 3 foundation factors, reflecting market digestion of a barely dovish inflation outlook however no near-term shift in coverage path.

Progress Estimates Held, Inflation Lowered

The RBI saved its actual GDP development forecast unchanged at 6.5 per cent for FY26. Quarterly projections stood at 6.5 per cent for Q1, 6.7 per cent in Q2, 6.6 per cent in Q3, and 6.3 per cent in This autumn, with Q1 FY27 seen at 6.6 per cent.

On inflation, the RBI made a noteworthy revision. The FY26 CPI inflation estimate was reduce to three.1 per cent from the sooner 3.7 per cent. Quarterly expectations had been additionally eased: 2.1 per cent in Q2, 3.1 per cent in Q3, and 4.4 per cent in This autumn, with Q1 FY27 at 4.9 per cent.

The Governor famous that whereas the near-term value atmosphere seems benign — partly as a result of a beneficial base — demand-led pressures might nudge inflation larger in direction of the tip of the fiscal.

Liquidity Measures, Exterior Place

The central financial institution additionally introduced a CRR reduce efficient September, aimed toward supporting liquidity situations and transmission of previous charge actions. “We are going to stay nimble and versatile in liquidity administration,” Malhotra mentioned, including that comfy liquidity has strengthened coverage effectiveness in latest quarters.

On the exterior entrance, the RBI projected that the Present Account Deficit will stay sustainable, with foreign exchange reserves at $688.9 billion, protecting greater than 11 months of merchandise imports. The Governor acknowledged web FPI outflows, largely pushed by the debt phase, however mentioned the general balance-of-payments place stays wholesome.

Actual Property Sector Beneath Stress

Outdoors of monetary markets, considerations proceed to mount in the actual property sector. In line with knowledge from ANAROCK Group, housing gross sales fell 20 per cent year-on-year within the June quarter, with solely 96,285 models bought, in comparison with over 120,000 models in the identical interval final yr.

Chairman Anuj Puri mentioned that whereas the RBI’s pause in charges might provide short-term aid, the sector — notably the reasonably priced housing phase — stays uncovered to exterior stress, together with Trump-era tariff bulletins and broader demand uncertainty. Additionally, common residential costs within the metro cities has gotten up by 39 per cent previously two years, including to affordability considerations.