Mumbai: The Reserve Bank of India (RBI) on Wednesday kept the repo rate unchanged at 5.25%, in line with market expectations, as the Monetary Policy Committee (MPC) opted to balance inflation risks with the need to support economic growth. The six-member MPC also retained its neutral policy stance, signalling that future decisions will remain data-dependent.
The announcement was made after the three-day MPC meeting chaired by RBI Governor Sanjay Malhotra, with the central bank continuing its wait-and-watch approach amid easing inflation and evolving global economic uncertainties.
Repo rate remains at 5.25%
The RBI left the benchmark repo rate unchanged at 5.25%, meaning borrowing costs for banks remain the same.
Consequently, other key policy rates also remain unchanged:
- Standing Deposit Facility (SDF): 5.00%
- Marginal Standing Facility (MSF): 5.50%
- Bank Rate: 5.50%
The decision was widely anticipated after inflation remained within the RBI’s target range while global uncertainties continued to persist.
MPC retains neutral stance
The Monetary Policy Committee retained its neutral stance, indicating that future monetary policy actions will depend on incoming macroeconomic data rather than following a predetermined path.
The RBI said the neutral stance provides flexibility to respond to changing domestic and global economic conditions while maintaining price stability.
GDP growth forecast retained
The central bank retained its FY2026-27 real GDP growth forecast at 6.5%.
According to the RBI, domestic demand remains resilient, supported by healthy consumption, government capital expenditure and improving private investment. Rural demand has also strengthened following favourable monsoon conditions.
The central bank expects economic activity to remain broadly stable despite global trade uncertainties.
Inflation outlook remains comfortable
The RBI observed that retail inflation has moderated significantly in recent months, helped by easing food prices and improving supply conditions.
While inflation risks have reduced, the central bank cautioned that weather-related disruptions, geopolitical developments and volatility in commodity prices continue to warrant close monitoring.
The MPC reiterated its commitment to maintaining inflation at the medium-term target of 4% while supporting sustainable growth.
Liquidity conditions to remain supportive
The RBI stated that it will continue to ensure adequate liquidity in the banking system through appropriate market operations whenever required.
The central bank said sufficient liquidity remains essential for the smooth transmission of monetary policy and stable financial conditions.
What the decision means for borrowers
Since the repo rate remains unchanged, borrowers are unlikely to see immediate changes in floating-rate home loans, vehicle loans and other repo-linked loans.
Banks may continue with existing lending rates unless they independently revise them based on funding costs or market conditions.
Similarly, deposit rates are also expected to remain broadly stable in the near term.
Markets react cautiously
Financial markets largely priced in the status quo decision before the announcement.
Analysts said the RBI’s emphasis on maintaining flexibility while keeping growth and inflation balanced provides policy stability for investors and businesses. Market participants will now closely monitor future inflation trends and global developments for clues on the RBI’s next move.
Conclusion
The RBI’s decision to keep the repo rate unchanged at 5.25% reflects its confidence that inflation remains under control while economic growth continues to be supported. By retaining the neutral stance and maintaining its GDP forecast, the central bank has signalled that future policy decisions will be guided by evolving economic data rather than a fixed rate trajectory.