MUMBAI — The Reserve Bank of India kept its benchmark policy repo rate unchanged at 5.25% on Thursday, extending its pause for a fourth consecutive monetary policy meeting as policymakers weighed easing underlying inflation against risks from higher energy prices and global geopolitical uncertainty.
The six-member Monetary Policy Committee (MPC) unanimously voted to leave the key lending rate unchanged and retained its neutral policy stance, Governor Sanjay Malhotra said while announcing the policy decision. The central bank said the stance would allow it to respond flexibly to evolving economic and inflation conditions.
Malhotra said the MPC wanted greater clarity on the trajectory and composition of inflation before considering any change in policy rates. While acknowledging recent increases in global oil prices, he said the central bank remained confident that inflation would stay broadly under control, though it would remain alert to potential second-round effects from higher energy costs.
The RBI also revised its macroeconomic projections, raising its growth forecast for the 2026-27 fiscal year while lowering its inflation outlook, reflecting confidence in domestic economic activity and expectations of moderating price pressures. The revisions came despite continued uncertainty stemming from geopolitical tensions and volatility in global commodity markets.
India's economy has remained relatively resilient, supported by domestic demand, manufacturing activity and services, even as policymakers monitor the potential impact of higher crude oil prices on inflation and the rupee. The RBI's inflation target remains 4%, with a tolerance band of 2 percentage points on either side.
Financial markets had broadly anticipated the decision, with economists increasingly pushing back expectations for the next rate increase. Several analysts now expect the RBI to remain on hold until at least December, citing subdued core inflation and the central bank's cautious approach despite headline inflation moving modestly above target in recent months.
The RBI's decision contrasts with policy tightening by some other central banks in Asia that have responded more aggressively to inflationary pressures linked to higher energy costs and currency weakness. Indian policymakers have instead emphasized balancing price stability with sustaining economic growth while remaining prepared to act if inflation risks intensify.
The next meeting of the Monetary Policy Committee will provide the RBI with another opportunity to assess incoming data on inflation, growth and global financial conditions before determining whether any adjustment to monetary policy is warranted.
