In its final bi-monthly monetary policy meeting for the fiscal year 2025-26, the Reserve Bank of India (RBI) decided to keep the repo rate unchanged at 5.25%. The decision reflects the central bank’s cautious approach amid evolving economic conditions.
Key Highlights
Repo Rate Unchanged at 5.25%
The Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, unanimously voted to maintain the repo rate at 5.25%. This marks the second consecutive meeting where the rate has been held steady, following a cumulative reduction of 125 basis points since February 2025.
Neutral Policy Stance Maintained
The MPC continues with its ‘neutral’ stance, indicating flexibility to adjust policy rates in response to future economic developments.
GDP Growth Projection Raised to 7.4%
The RBI has revised its real GDP growth forecast for FY26 upwards to 7.4%, citing robust domestic demand and supportive government policies.
Inflation Outlook
The central bank projects Consumer Price Index (CPI) inflation to average around 2.1% for FY26, with food prices remaining a significant concern.
Implications for Stakeholders
Borrowers
With the repo rate unchanged, lending rates for home loans, personal loans, and other borrowings are likely to remain stable in the near term, providing relief to borrowers.
Investors
The RBI’s cautious approach suggests a focus on maintaining financial stability. Fixed-income investments may continue to offer attractive returns, while equity markets may respond positively to the central bank’s commitment to supporting growth.
Conclusion
The RBI’s decision to keep the repo rate unchanged underscores its commitment to balancing growth and inflation objectives. As the economic landscape evolves, the central bank remains vigilant, ready to adjust its policies to ensure macroeconomic stability.