The Reserve Bank of India's Monetary Policy Committee (MPC) has unanimously decided to keep the policy repo rate unchanged at 5.25%, in line with the expectations of the vast majority of market observers.
All 33 economists tracked by Bloomberg anticipated no change in the benchmark rate, pointing to a broad consensus that the Monetary Policy Committee will extend its pause while assessing evolving global and domestic conditions.
RBI Governor Malhotra said real GDP growth for the current fiscal year is projected at 6.9%, while cautioning that the domestic growth outlook continues to face headwinds from an uncertain global macroeconomic environment.
The RBI has revised its FY26 real GDP growth forecast downward to 7.3% from the earlier estimate of 7.6%. The central bank noted that real GDP growth for the previous year is now estimated at 7.6%, reflecting strong underlying momentum supported by robust consumption and investment, aided by supportive policy measures, ongoing structural reforms and favourable financial conditions.
CPI inflation for FY27 is projected at 4.6%. He added that the RBI will continue giving core inflation forecast going ahead.
FY27 inflation is projected at 4.6%
- Q1: 4%
- Q2: 4.4%
- Q3: 4.2%
- Q4: 4.7%
MSF and Bank rates also remain unchanged at 5.50%, and SDF rate is also maintained at 5.00%.
Rupee has depreciated over the last year, Governor Sanjay Malhotra said. He reiterated the central bank's policy of intervention in FX market only to manage volatility and not target any price level.
The RBI recently enforced stricter regulations to limit speculative activities by setting a ceiling of $100 million on banks' net open positions, imposing limitations on non-deliverable forwards (NDFs), and prohibiting the rebooking of contracts that have been cancelled.
Commentary From The Governor
RBI Governor Malhotra said the global economy is facing unprecedented challenges, with rising downside risks to growth, particularly due to elevated oil prices and supply‑side constraints that have reignited inflation concerns.
He noted that India's economic fundamentals had already been strong and confidence‑inspiring even before the escalation of tensions in Middle East, and stressed that the country's macro position is stronger today than during many previous global crises. According to Malhotra, India's underlying economic fundamentals remain firmly on a strong footing despite the volatile global backdrop.
RBI Governor Malhotra said that core inflation pressures remain subdued, even as the Monetary Policy Committee flagged that the ongoing Middle East conflict could weigh on India's growth outlook. However, Malhotra cautioned that supply‑side disruptions stemming from the conflict could impact certain key sectors and pose downside risks to growth, describing the situation as a supply shock confronting the economy. He added that the government has already taken measures to mitigate the adverse effects of the Middle East war and reiterated that the fundamental strength of the Indian economy remains intact despite these challenges.
Looking ahead, the RBI cautioned that elevated energy and commodity prices, along with potential disruptions to input availability arising from tensions in the Strait of Hormuz, could weigh on growth during the current year. It added that the government has taken proactive steps to ensure the availability of critical inputs across key sectors to limit the impact of supply‑chain disruptions. At the same time, sustained strength in the services sector, the continued benefits of last year's GST rationalisation, and healthy balance sheets of financial institutions and corporates are expected to provide ongoing support to economic activity.
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