RBI cuts repo rate by 50 bps to 5.50%, changes policy stance to ‘neutral’; CRR reduced by 100 bps

The Reserve Bank of India (RBI) on Friday announced its second bi-monthly monetary policy of FY26. The RBI Governor Sanjay Malhotra-led Monetary Policy Committee (MPC) decided to cut the repo rate by 50 basis points (bps) to 5.50% from 6.00% earlier. This is the central bank’s third consecutive repo rate cut.

The MPC also decided to change the policy stance to ‘Neutral’ from ‘Accommodative’, RBI Governor Sanjay Malhotra announced in his monetary policy speech.

Malhotra also announced that the MPC decided to cut the Cash Reserve Ratio (CRR) by 100 basis points (bps) to 3% from 4% earlier in four tranches of 25 bps each starting from September 6, October 4, November 1 and November 29 this year.

CRR cut to release primary liquidity of ₹2.5 lakh crore in the banking system, said RBI Governor Sanjay Malhotra

In its April monetary policy meeting, RBI had reduced the repo rate by 25 bps and also shifted the policy stance to ‘accommodative’ from ‘neutral’.

RBI maintained GDP forecast for FY26 at 6.5%. GDP estimates for Q1FY26 is at 6.5%, Q2FY26 at 6.7%, Q3FY26 at 6.6% and Q4FY26 is at 6.3%.

Meanwhile, CPI inflation forecast for FY26 has been reduced to 3.7% from 4% earlier. Q1FY26 CPI inflation is projected at 2.9% from 3.6% earlier, while projections for Q2FY26 has been cut to 3.4% from 3.9%, Q3FY26 raised to 3.8% from 3.9% and Q4FY26 has been maintained at 4.4%.

(To be updated)

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