One of the most significant announcements was the upward revision of India’s GDP growth forecast for FY 2025–26—from 6.5% to 6.8%
In a move reflecting cautious optimism, the Reserve Bank of India (RBI) kept the benchmark repo rate steady at 5.50% while upgrading the country’s economic growth forecast and trimming inflation expectations. The decisions emerged from the three-day meeting of the Monetary Policy Committee (MPC), which concluded on Wednesday.
The unchanged repo rate underscores the RBI’s strategy to balance economic momentum with financial stability, amid ongoing global uncertainty and domestic resilience. The central bank signaled confidence in India’s macroeconomic fundamentals, fueled by robust investment, consumption, and a favourable monsoon.
Growth Outlook Raised
One of the most significant announcements was the upward revision of India’s GDP growth forecast for FY 2025–26—from 6.5% to 6.8%. The economy grew at an impressive 7.8% in the first quarter, up from 7.4% in the previous quarter, marking the fastest pace in nearly two years. This acceleration is attributed to higher capital expenditure, strong urban consumption, and continued government spending.
Inflation Forecast Cut
In another positive signal, the RBI lowered its consumer price index (CPI) inflation forecast for FY 2025–26 to 2.6%, down from 3.1%. Headline inflation has been on a declining trend, dropping for nine consecutive months to an eight-year low of 1.6% in July 2025, before a slight uptick to 2.1% in August. The central bank emphasized that inflation remains well within its target range, supported by better supply chains and moderated food prices.
Internationalisation of Rupee
As part of broader financial sector reforms, the RBI announced measures to internationalise the Indian Rupee. Indian banks and their overseas branches will soon be allowed to extend loans in rupees to residents of Bhutan, Nepal, and Sri Lanka. The move is seen as a step towards enhancing the rupee’s role in regional trade and reducing dependence on the U.S. dollar.
Trade and Market Trends
Despite global trade headwinds, India’s merchandise exports grew by 2.5% during April–August 2025, while imports rose 2.1%. Services exports maintained double-digit growth. In Q1 FY 2025–26, real exports and imports of goods and services grew by 6.3% and 10.9% respectively.
Meanwhile, Indian equity markets continued to show resilience. Between April and September, the markets sustained a steady upward trajectory, reflecting investor confidence in India’s economic recovery and policy stability.
In sum, the RBI’s latest policy review sends a clear message: growth is back on track, inflation is under control, and the central bank is looking beyond borders to cement India’s financial influence in the region.
