RBI keeps repo rate unchanged at 5.5% for second consecutive time

The Reserve Bank of India’s Monetary Policy Committee on Wednesday kept the repo rate unchanged at 5.5% for the second consecutive time, citing global tariff-related uncertainties.

The repo rate is the interest rate at which the central bank lends money to commercial banks. The Monetary Policy Committee reviews the rate every two months.

In June, the committee had cut the repo rate by 50 basis points, lowering it from 6% to 5.5%. The rate was reduced by 25 basis points each in April and February.

A basis point is one-hundredth of a percentage point. Basis points are used to describe the percentage change in the value of a financial instrument.

Central banks usually reduce repo rates to stimulate economic growth by making borrowing cheaper for individuals and businesses. This translates to lower equated monthly instalments for borrowers.

Reserve Bank of India Governor Sanjay Malhotra said on Wednesday that the committee had also decided to maintain its monetary policy stance as “neutral”.

“However, two members – Dr Nagesh Kumar and Professor Ram Singh – were of the view that the stance be changed from neutral to accommodative,” the central bank stated in a press release.

A neutral stance means that the Reserve Bank remained flexible in adjusting policy rates based on prevailing economic conditions. In contrast, a withdrawal of accommodation is a restrictive stance where...

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