New Delhi: The Reserve Bank of India (RBI) has kept the repo rate unchanged at 5.25 percent following the conclusion of its three day Monetary Policy Committee (MPC) meeting, citing global uncertainties, volatile crude oil prices and inflation risks linked to the ongoing Iran conflict.
The decision to maintain the policy rate and continue with a neutral monetary policy stance was taken unanimously by the six member MPC. The RBI also retained the Standing Deposit Facility (SDF) rate at 5 percent, while keeping the Marginal Standing Facility (MSF) rate and the Bank Rate unchanged at 5.5 percent.
Announcing the policy decision, RBI Governor Sanjay Malhotra said the Indian economy has remained resilient despite geopolitical uncertainties and elevated energy prices. He noted that headline inflation has increased broadly in line with expectations, largely due to food and fuel prices, while core inflation has remained moderate.
The central bank revised its FY27 retail inflation forecast downward from 5.1 percent to 5 percent, reflecting lower than expected inflation in the first quarter. At the same time, it raised the FY27 real GDP growth projection from 6.6 percent to 6.7 percent, signalling confidence in the country’s economic momentum.
Malhotra cautioned that uncertainty surrounding global trade policies, volatile crude oil prices and weather related risks continue to cloud the outlook. He said the renewed escalation of the Iran conflict since early July has increased volatility in energy markets, while the possibility of El Nino affecting rainfall distribution remains a significant concern for inflation.
Despite these challenges, the RBI observed that India’s economy performed better than expected during the first quarter, supported by healthy manufacturing activity and strong consumer spending.
The central bank emphasised that future monetary policy decisions will depend on the evolving inflation trajectory, particularly food and fuel prices, while balancing the need to support economic growth and maintain price stability. By holding rates steady, the RBI signalled that it will closely monitor domestic and global developments before considering any further policy action.
