RBI Keeps Repo Rate Steady at 5.25% Amid Global Headwinds

Mumbai, Apr 8: The Reserve Bank of India on Wednesday kept the policy repo rate unchanged at 5.25 per cent in its first monetary policy decision for FY27, citing global uncertainties and geopolitical tensions, particularly the West Asia conflict.

Announcing the decision, RBI Governor Sanjay Malhotra said the Monetary Policy Committee (MPC) unanimously voted to maintain the repo rate under the liquidity adjustment facility at 5.25 per cent.

“After a detailed assessment of evolving macroeconomic and financial developments and the outlook, the MPC voted unanimously to keep the policy repo rate unchanged at 5.25 per cent,” he said.

The Standing Deposit Facility (SDF) rate remains at 5 per cent, while the Marginal Standing Facility (MSF) rate and the bank rate continue at 5.5 per cent, the Governor added.

The MPC meeting, held from April 6 to 8, reviewed domestic and global economic conditions before arriving at the decision.

The central bank noted that the policy stance comes amid heightened global challenges driven by geopolitical tensions, especially the ongoing West Asia conflict, along with disruptions in global supply chains.

Malhotra said that prior to the conflict, India’s macroeconomic fundamentals indicated strong growth and low inflation. However, conditions turned adverse in March as the conflict intensified.

Despite this, he emphasised that India’s economic fundamentals remain strong and better positioned than during previous crises and compared to many other economies, offering resilience against global shocks.

He highlighted that global growth faces downside risks due to rising energy prices and shortages of key inputs, which have heightened inflation concerns and increased geopolitical risk premiums in oil markets.

Uncertainty arising from the conflict has also impacted global financial markets, strengthening the US dollar and putting pressure on other major currencies.

Meanwhile, commodity prices such as metals and gold have moderated, while financial markets have seen increased volatility. Equity markets witnessed broad-based corrections, and sovereign bond yields hardened amid inflation concerns and fiscal sustainability worries. (Agencies)