The Reserve Bank of India's Monetary Policy Committee on Wednesday has kept the key repo rate unchanged at 5.25%, maintaining a neutral stance.
The April 6-8 monetary policy outcome is the first meeting of the new financial year and after the US-Iran war disrupted oil supply routes and pushed up oil prices. Experts expected the MPC to hold the repo rate for the second time amid the ongoing geopolitical developments.
RBI Governor Sanjay Malhotra mentioned the inflationary risks from higher global energy prices but expressed confidence in the macroeconomic fundamentals of the country. The central bank has slashed the interest rates by around 125 basis points since February last year, with the last rate cut in December 2025.
Speaking on RBI's stance, experts highlighted the central bank's wait and watch approach, which was in line with the expectations, while highlighting further rate pause in the upcoming meetings.
The MPC projected growth at 6.9% in FY27, supported by sustained momentum in manufacturing and services.
Highlighting on RBI's stance and growth outlook, Tanvee Gupta Jain, chief economist at UBS Securities, said that the policy is balanced with a wait-and-watch approach. The growth outlook of 6.9%, based on an assumption of reasonable oil prices amid the geopolitical conflict.
Assuming further pause in repo rate and flagging inflation, growth risks, Naveen Kulkarni, chief investment officer at Axis Securities PMS, said: "The RBI's decision to maintain the repo rate and its Neutral stance did not come as a surprise and was already priced in."
"For now, we believe this could be the end of the rate cut cycle, and the RBI will pause rates from here. Although a 2-week ceasefire has been announced, risks persist, posing a downward risk to GDP growth estimates and an upward revision risk to inflation estimates," Kulkarni said.
Highlighting the way forward for the central bank, Sujan Hajra, chief economist and executive director at Anand Rathi Group, said, "From here, the RBI is likely to continue with a data-dependent approach, suggesting an extended pause in rates. The broader policy stance is also likely to remain neutral, although liquidity conditions may continue to be managed in an accommodative manner."
Reflecting on the current rate pause, Adhil Shetty, CEO of BankBazaar said, "The RBI has held the repo rate at 5.25% for the second consecutive meeting, but the context this time is meaningfully different. This is not a routine pause. The MPC has flagged a supply shock driven by the West Asia conflict, with crude oil surging well above its own planning assumptions. The unanimous decision to hold reflects a deliberate choice to wait and watch before acting in either direction."
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