- RBI kept repo rate unchanged at 5.25% after MPC's three-day meeting
- Monetary policy stance remains neutral with rates expected to stay low
- Q1 inflation for FY2027 projected at 4%, higher than previous 3.9% estimate
The Reserve Bank of India (RBI) has kept its key lending rate, known as the repo rate, unchanged at 5.25% in the first monetary policy decision after Union Budget 2026. RBI Governor Sanjay Malhotra announced the decision after a three-day meeting of the Monetary Policy Committee (MPC), held every two months to decide the central bank's financial strategy.
The decision to retain the previous rate was on expected lines amid strong growth and reduced pressure of tariffs following a trade agreement with Washington. The US trade deal augurs well for the economy, Malhotra said, as India remains one of the fastest-growing major economies.
The RBI retained its monetary policy stance at "neutral," suggesting that the rates will stay low for some time.
The Indian economy is in a good spot amid global uncertainty, the RBI governor said, pointing out that underlying data shows growth momentum that may be sustained for a longer period.
In his bi-monthly policy address, Malhotra also said that a framework will be proposed to compensate customers up to Rs 25,000 for losses in small-value digital transaction frauds. He said that draft guidelines will also be issued on the misselling by lenders, recovery of loans. and the use of recovery agents.
The Q1 (March-May 2026) inflation for the next financial year (FY2026-27) has been marginally raised to 4%, as against the previous estimate of 3.9%. It has been projected at 4.2% in the quarter after that. In the current financial year, ending next month, the overall retail inflation was raised to 2.1%, with the estimate for the ongoing quarter at 3.2%.
The real GDP growth for the current financial year is pegged at 7.4%. In the next financial year, the GDP growth has been projected at 6.9% in Q1 and 7% in Q2.
India is expected to grow by 7.4% in the current financial year, according to this year's economic survey, with next year's forecast falling between 6.8% and 7.2%.
