The Reserve Bank of India keeps its benchmark repo rate unchanged at 5.25% for the fourth consecutive meeting amid uncertain inflation and global economic conditions, signalling a cautious stance as it waits for clearer signs on price pressures.
The Reserve Bank of India left its benchmark repo rate unchanged at 5.25% on Thursday, holding policy steady for a fourth consecutive meeting as officials waited for clearer signs on the inflation outlook. According to Commerzbank’s Charlie Lay, the Monetary Policy Committee again kept a neutral stance, signalling that it is not yet ready to change course despite mixed signals from prices and growth.
The central bank’s decision came after June consumer inflation rose to 4.4% year on year, slightly above its 4% target. Even so, policymakers judged the latest price pressures to be driven largely by supply factors rather than a broad-based rise in demand. The RBI trimmed its inflation forecast for fiscal 2026-27 to 5.0% from 5.1%, while lifting its growth projection to 6.7% from 6.6%, citing resilient domestic demand and supportive government policy. Separate reports from Indian news outlets said the RBI has also been navigating a wider backdrop of geopolitical tension, volatile crude prices and uneven global growth.
The hold fits a pattern seen across recent policy meetings. In June, the RBI had already kept rates unchanged at 5.25% and maintained a neutral stance, with governor Sanjay Malhotra pointing to global uncertainty and elevated market volatility. Earlier in April, the central bank had projected 6.9% growth for fiscal 2026-27 and inflation at 4.6%, underscoring how the outlook has shifted only modestly as policymakers balance expansion against price pressures.
In foreign exchange markets, the rupee got limited support from the policy pause. USD/INR slipped to about 95.10, helped by lower oil prices and stronger capital inflows, but the currency remains among Asia’s weakest this year. The RBI said measures introduced in June to draw foreign capital have already brought in more than $40bn through FCNR(B) deposits and overseas borrowing channels, which has helped soften pressure on the rupee. Interest-rate markets have also pared back expectations for near-term tightening, with the chance of an October increase falling sharply after the meeting, according to Commerzbank.
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