RBI MPC: Central bank keeps repo rate unchanged at 5.25%, maintains neutral stance

The Reserve Bank of India (RBI) on Wednesday kept key policy rates unchanged, while retaining a “neutral” stance to balance economic growth with emerging inflation risks.

At the first meeting of the financial year 2026-27, held from April 6 to 8, the monetary policy committee (MPC), chaired by RBI governor Sanjay Malhotra, unanimously voted to keep the repo rate unchanged at 5.25%. The standing deposit facility (SDF) rate was also maintained at 5.0%, while the marginal standing facility (MSF) rate and the bank rate were kept steady at 5.50%.

The central bank had last reduced the repo rate by 25 basis points (from 5.50%) in December 2025. In the previous bi-monthly policy meeting in February 2026, the apex bank had left rates unchanged and maintained a “neutral” stance.

The policy decision was broadly in line with Street expectations, as economists had anticipated that the RBI would hold rates and adopt a wait-and-watch approach amid the evolving West Asia conflict. With no clear signs of a ceasefire and inflationary pressures building up, economists noted that it remains difficult to assess the full impact of the conflict on both inflation and growth going forward. The U.S.-Israel-Iran conflict has pushed crude oil prices above $100 per barrel and put pressure on the Indian rupee.

While announcing the MPC decision, Malhotra said the global economy is currently facing unprecedented challenges due to heightened geopolitical tensions, particularly the ongoing conflict in West Asia, for which a temporary ceasefire has been announced. He also noted that global supply chains were already under strain even before the escalation.

“The global economy is facing unprecedented challenges from heightened geopolitical tensions and disruptions to supply chains,” Malhotra said.

Macro fundamentals remain strong

Despite these headwinds, he emphasised that India’s macroeconomic fundamentals remain strong.“The fundamentals of the Indian economy are on a stronger footing at the current juncture, providing it with greater resilience to withstand shocks,” he noted.

He highlighted that global growth faces increasing downside risks due to elevated energy prices and supply shortages, which have stoked inflation concerns and increased volatility in financial markets. “Heightened uncertainty has pushed up geopolitical risk premiums in oil markets and weighed on the global growth outlook,” he said.

“Against this backdrop, the MPC decided to keep the policy repo rate unchanged while continuing with the neutral stance, retaining flexibility to respond to evolving conditions,” Malhotra said.

Explaining the rationale, he said that while headline inflation remains contained, risks are rising.

“Upside risks to inflation have increased due to higher energy prices and potential weather-related disruptions,” he said, adding that “core inflation pressures remain muted, but uncertainties persist.”