RBI Maintains Repo Rate at 5.25% Amid Global Uncertainties

The Reserve Bank of India has opted to keep the repo rate steady at 5.25%, reflecting a cautious stance amid global uncertainties. Governor Sanjay Malhotra highlighted rising geopolitical tensions as a concern that could impact economic growth. The RBI projects a GDP growth of 6.9% for FY27, while inflation risks are noted to be increasing due to supply chain disruptions. Despite these challenges, the domestic economy shows resilience, with a previous year's growth of 7.6%. The central bank's decision aims to maintain stability in the financial markets.

By Narendra Chaudhary Apr 8, 2026, 11:06 IST

RBI's Decision on Repo Rate

On Wednesday, Sanjay Malhotra, the Governor of the Reserve Bank of India, announced that the repo rate will remain steady at 5.25 percent. This decision was part of the latest Monetary Policy Committee (MPC) meeting, where the central bank opted for a neutral policy stance, reflecting a cautious approach in light of ongoing global uncertainties. The governor highlighted the escalating geopolitical tensions involving the US, Israel, and Iran as a significant concern. He noted that the current conflict in West Asia could negatively impact global economic growth, which may, in turn, affect Indian exports and reduce remittance inflows—both vital for India's external stability.

Key Insights from Governor Sanjay Malhotra

GDP Growth Forecast: The RBI has projected a GDP growth rate of 6.9 percent for the fiscal year 2027. The quarterly growth estimates are as follows:

Q1: 6.8 percent
Q2: 6.7 percent
Q3: 7.0 percent
Q4: 7.2 percent

Inflation Risks on the Rise: The central bank has also indicated that inflation risks are trending upward. Disruptions in supply chains, particularly in energy and fertilizers, could lead to increased costs and strain public finances. These factors may hinder efforts to keep inflation within the target range while ensuring fiscal discipline. The Consumer Price Index (CPI) inflation for FY27 is projected at 4.6 percent, with quarterly estimates as follows:

Q1: 4.0 percent
Q2: 4.4 percent
Q3: 5.2 percent
Q4: 4.7 percent

Domestic Economy's Resilience: Despite the global challenges, the RBI expressed a cautiously optimistic view regarding India's economic resilience. The economy is estimated to have achieved a real GDP growth of 7.6 percent in the previous fiscal year, showcasing robust domestic demand. Compared to past periods of global stress, India's macroeconomic fundamentals seem better equipped to handle shocks.

Focus on Liquidity and Market Sentiment: The Governor also warned that increased uncertainty and risk aversion in global financial markets could affect domestic liquidity. Changes in investor sentiment during volatile periods may have repercussions on capital flows and overall financial stability.

Policy Rates Remain Unchanged: Alongside the repo rate, other key rates have also been maintained: Repo rate: 5.25 percent, Standing Deposit Facility (SDF): 5.00 percent, Marginal Standing Facility (MSF) & Bank Rate: 5.50 percent, with a neutral stance.