RBI Maintains Repo Rate Amid Global Economic Uncertainty

The Reserve Bank of India has decided to maintain the repo rate at 5.25% during its latest Monetary Policy Committee meeting, citing the impact of the ongoing Iran conflict on the global economy. Governor Sanjay Malhotra expressed concerns about potential disruptions affecting India's growth while providing GDP growth projections for the upcoming quarters. The decision means that home loan EMIs are unlikely to change in the near term, as borrowers will continue to face existing interest rates. The article delves into the implications of this decision on the economy and home loans.

By Narendra Chaudhary Apr 8, 2026, 10:36 IST

RBI's Decision on Repo Rate

In its inaugural Monetary Policy Committee (MPC) meeting since the onset of the Iran conflict, which has significantly affected the global economy, the Reserve Bank of India (RBI) has unanimously opted to maintain the repo rate at 5.25%. During the announcement, RBI Governor Sanjay Malhotra remarked, "The ongoing crisis in the Middle East has adversely impacted the global economy, leading to an energy crisis worldwide." Nevertheless, he expressed optimism for a potential easing following the recent ceasefire declaration.

Governor Malhotra highlighted that the turmoil in West Asia is expected to influence the Indian economy, stating, "Disruptions in the Strait of Hormuz could hinder growth this year. However, the government has been proactive in ensuring the supply of essential inputs across critical sectors to mitigate the effects of supply chain disruptions." He noted that the revised GDP series estimates the real GDP growth for the previous year at 7.6%. For quarterly GDP growth projections, he indicated a forecast of 6.8% for Q1, 6.7% for Q2, 7% for Q3, and 7.2% for Q4.

Regarding inflation, the RBI Governor projected rates of 4% for Q1, 4.4% for Q2, 5.2% for Q3, and a decrease to 4.7% in Q4. He cautioned that elevated crude oil prices could lead to increased imported inflation and widen the current account deficit. Additionally, a weaker global growth outlook may dampen external demand and reduce remittance flows.

Earlier in the day, the Indian stock market reacted positively to the US-Iran ceasefire, with the benchmark Nifty opening above 23,800, gaining nearly 800 points or 3.45%, while the Sensex surged over 2500 points to reach 77,144. US President Donald Trump announced a suspension of planned military action against Iran for two weeks after discussions with Pakistani leaders, just hours before his deadline for Tehran expired. Trump stated that this decision followed talks with Shehbaz Sharif and Asim Munir, who urged him to postpone an attack.

In response, Iran's foreign minister, Abbas Araghchi, confirmed that Tehran had accepted Pakistan's ceasefire proposal, stating that attacks against Iran would cease and that Iran would also halt its defensive operations. He added, "For a period of two weeks, safe passage through the Strait of Hormuz will be coordinated with Iran’s Armed Forces."

Implications for Home Loans

The home loan market is closely tied to the repo rate adjustments made by the RBI. A pause in the repo rate suggests that borrowers may not see immediate relief in their EMIs. Since most home loans are linked to benchmarks like the repo rate, maintaining the current policy rate means that EMIs will likely remain stable in the short term.

If the RBI decides to increase the repo rate, banks will face higher borrowing costs, which could lead to increased EMIs or extended loan tenures for borrowers. Conversely, a rate cut would typically prompt banks to lower their rates, making loans more affordable. With the RBI holding rates steady, borrowers may need to continue servicing their loans at existing interest levels. Additionally, banks are expected to be cautious in passing on any marginal benefits due to tight liquidity conditions and elevated funding costs.