RBI keeps repo rate unchanged at 5.25 per cent amid global uncertainties

RBI Governor Sanjay Malhotra said trade uncertainties continue to linger following fresh US tariffs, while crude oil prices and financial markets remain volatile amid the West Asia conflict. PIC/RBI

The Reserve Bank of India (RBI) on Wednesday kept the repo rate unchanged at 5.25 per cent, maintaining the status quo at its latest Monetary Policy Committee (MPC) meeting amid the ongoing geopolitical tensions.

The Standing Deposit Facility (SDF) rate also remained at 5 per cent, while the Marginal Standing Facility (MSF) rate and the bank rate stood at 5.5 per cent.

RBI Governor on impact of US tariffs and West Asia conflict on Indian economy

RBI Governor Sanjay Malhotra said trade uncertainties continue to linger following fresh US tariffs, while crude oil prices and financial markets remain volatile amid the West Asia conflict.

Governor Malhotra also said that while the economy remains resilient, incipient stress persists in certain segments, and there are considerable risks surrounding both inflation and growth assessments.

Several economists had expected the six-member MPC to maintain the status quo on interest rates and retain its neutral policy stance.

Furthermore, the policy review comes at a time when inflation has edged higher in recent months, though it remains within the RBI's tolerance band. Rising crude oil prices, currency movements, and developments in West Asia remain key factors influencing the Central bank's outlook.

At the same time, domestic economic conditions have remained resilient, supported by healthy growth momentum and robust foreign capital inflows.

In the earlier MPC meeting in June, it was unanimously decided to keep the policy repo rate unchanged at 5.25 per cent, in line with the expectations from economists.

Key takeaways from the RBI's 2026 MPC meeting

• GDP: India's real GDP growth to stand at 6.7 per cent for FY 2026-27
• Inflation: CPI inflation for 2026-27 is projected to be 5.0 per cent with Q2 at 4.7 per cent; Q3 at 5.9 per cent; and Q4 at 5.5 per cent. Inflation for Q1:2027-28 is projected at 5.3 per cent with risks being evenly balanced. Core inflation is projected at 4.3 per cent for 2026-27. Core inflation excluding precious metals is projected to be lower, though it is likely to align with core inflation from Q4. The RBI flagged geopolitical tensions, volatile oil prices, El Niño-linked monsoon risks and global trade uncertainties as major risks to growth and inflation.
  
• Repo rate unchanged: The RBI kept the repo rate unchanged at 5.25 per cent, maintaining the status quo.
• Policy stance retained: The MPC continued with its neutral monetary policy stance, indicating flexibility based on evolving economic conditions.
• Standing Deposit Facility (SDF): Remained unchanged at 5.00 per cent.
• Marginal Standing Facility (MSF) rate: Kept at 5.50 per cent.
• Bank Rate: The bank rate is the official interest rate at which the RBI lends money to commercial banks. Keeping it steady, the RBI announced that the bank rate will be maintained at 5.50 per cent.