The Reserve Bank of India (RBI) has opted to keep the repo rate unchanged at 5.25%, continuing with a neutral monetary policy stance to ensure the monetary policy is not hurt by the inflationary pressures or growth concerns. RBI Governor Sanjay Malhotra made the statement after the Monetary Policy Committee (MPC) unanimously decided to keep the policy rate unchanged in its first bi-monthly monetary policy meet for the current financial year. The committee also did not change the Standing Deposit Facility (SDF) rate at 5% and the Marginal Standing Facility (MSF) rate and Bank Rate remained at 5.50% respectively. The meeting, which was led by Governor Malhotra, started on Monday and ended with a unanimous decision by the MPC to keep policy continuity despite the changing domestic and global economic conditions.
Key Highlights
- RBI unanimously retains the repo rate at 5.25% while maintaining a neutral monetary policy stance nationwide.
- RBI projects India's FY27 GDP growth at 6.9%, with inflation forecast at 4.6% amid global uncertainties.
RBI Projects 6.9% GDP Growth, Inflation at 4.6%
The Reserve Bank of India has projected India's real Gross Domestic Product (GDP) growth at 6.9% for this financial year, indicating the nation's economic strength amid the global economic turmoil. The RBI also had estimated the previous financial year's GDP growth rate at 7.6%. The inflationary pressures, meanwhile, are likely to be contained within the central bank's comfortable target window, with consumer price index (CPI) inflation projected to average 4.6% in the current fiscal year, while remaining risks have to be taken into account.
Governor Malhotra stressed that global uncertainties, especially the current issue of the war in West Asia, still remain a challenge to India's economy. Higher crude oil prices, international freight and insurance rates, and supply chain disruptions could drive up production expenses for enterprises and negatively affect growth, he said. In addition, there is a potential for additional upward pressure on food prices from El Nino conditions, which will further compound food price inflation concerns. Hence, the RBI has taken a conservative course of action with a “wait and watch” policy, which is to watch and wait the developments in the global scenario and its impact on inflation and economic activity.
Also Read: RBI Keeps Repo Rate Unchanged at 5.25%, Maintains Neutral Stance
RBI Stresses Economic Resilience and Stable Forex Policy
The RBI Governor said that despite the geopolitical uncertainties India's macroeconomic fundamentals were robust and the economy was in a much better shape today to withstand any external shocks than in the past years. "Government efforts to improve exports and ensure supply chains will mitigate impacts of global supply chain events on domestic industries", he said.
On the Indian rupee, Malhotra noted that its value fell at a higher level than the average in 2025-26. But he said that the foreign exchange policy of the RBI is unchanged. The Governor states that intervention to smooth the forex market is only conducted to minimise unwanted and unwanted volatility and not to support a specific exchange rate level. He said that the Indian rupee will always be market-determined, and the RBI would only intervene if it was needed to bring it back to the economic fundamentals since of any currency movement it was by the hand of the speculators.
The latest policy move is part of the RBI's efforts to ensure financial stability without compromising the growth momentum of the economy in the face of continuing uncertainties in the global economy and inflationary pressures.
