RBI holds repo rate steady at 5.25%, sees GDP growth at 6.9%; warns of US-Iran war impact
&imwidth=600&imheight=450&format=webp&quality=medium "RBI holds repo rate steady at 5.25%, sees GDP growth at 6.9%; warns of US-Iran war impact")
File photo of RBI Governor Sanjay Malhotra. Photograph: (ANI)
Notably, the repo rate decision came just hours after US President Donald Trump announced a “bilateral ceasefire” with Iran, which sparked a rally in global markets. Indian benchmark indices also opened higher following the development.
The Reserve Bank of India’s Monetary Policy Committee (MPC) announced to keep the repo rate unchanged at 5.25 per cent on Wednesday. This marked a second consecutive pause amid rising global tensions in West Asia. The decision taken by the RBI shows a cautious approach because inflation risks have increased amid the global uncertainties, and the apex bank has maintained that domestic growth momentum remains strong and resilient.
In another key move, RBI Governor Sanjay Malhotra announced the suspension of due diligence requirements for MSMEs on select trade platforms, aiming to improve ease of doing business.
Notably, the repo rate decision came just hours after US President Donald Trump announced a “bilateral ceasefire” with Iran, which sparked a rally in global markets. Indian benchmark indices also opened higher following the development.
The Monetary Policy Committee, led by the RBI Governor, convenes every two months to assess key economic indicators and decide on policy direction. The central bank had earlier kept the rate unchanged in its August, October, and February 2026 reviews.
Key highlights of RBI MPC Meeting:
- Repo rate unchanged at 5.25%; policy stance remains neutral.
- Second consecutive pause after February, following a 25 basis points cut in December 2025.
- Inflation risks rising, with projections revised upward, particularly for FY26 and near-term quarters.
- FY27 CPI inflation forecast at 4.6%, within RBI’s target band.
- Inflation to peak mid-year, projected at 4 per cent in Q1 FY27, rising to 4.4 per cent in Q2, peaking at 5.2 per cent in Q3, and easing to 4.7 per cent in Q4.
- GDP growth outlook improved, FY26 estimate raised to 7.6 per cent from 7.4 per cent earlier.
- FY27 growth projected at 6.9%, with risks tilted downward due to high energy prices and global uncertainties.
- Domestic demand remains strong, driven by services, manufacturing resilience, and healthy balance sheets.
- Private consumption and urban demand are expected to sustain economic momentum.
- Global risks persist, especially due to geopolitical tensions like the US-Iran conflict, affecting supply chains.
- Supply disruptions may fuel inflationary pressures, impacting demand conditions.
- Government support measures on exports and supply chains to cushion external shocks.
- India’s macro fundamentals remain strong, with the RBI emphasising vigilance and a data-driven policy approach.
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