RBI Keeps Repo Rate At 5.25%; Retains Neutral Stance Amid Global Uncertainty

The Reserve Bank of India (RBI) on Friday kept the benchmark repo rate unchanged at 5.25% and maintained its “neutral” monetary policy stance, signalling a balanced approach as it navigates rising global uncertainties and domestic inflation risks.

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Announcing the outcome of the Monetary Policy Committee (MPC) meeting, RBI Governor Sanjay Malhotra said the six-member panel decided to leave policy rates unchanged after reviewing growth and inflation conditions.

The MPC meeting was held between June 3 and June 5.
Alongside the repo rate, the central bank retained the Standing Deposit Facility (SDF) rate at 5%, while the Marginal Standing Facility (MSF) rate and Bank Rate remained at 5.5%.

RBI Flags Global Risks

Addressing the economic outlook, Malhotra said the global environment continues to face challenges arising from geopolitical tensions, supply-chain disruptions and heightened market volatility.

He noted that the ongoing conflict in West Asia has added to uncertainty in the global economy, affecting trade routes, business sentiment and financial markets.

Despite these headwinds, the RBI Governor said India remains relatively better placed to withstand external shocks compared with earlier periods of global stress, supported by stronger macroeconomic fundamentals.

GDP Growth Projected At 6.6% For FY27

The central bank projected India’s real GDP growth at 6.6% for FY27. According to the RBI’s estimates, economic growth is expected to remain broadly stable across the fiscal year, although elevated energy prices and global supply disruptions may weigh on activity. The quarterly growth projections are:

The MPC noted that some high-frequency indicators are showing early signs of moderation in certain sectors. The committee also raised uncertainties over food prices and weather conditions, including concerns over forecasts of a below normal south west monsoon and the possible impact of El Nino.

Inflation Forecast Raised To 5.1%

The RBI projected consumer price inflation (CPI) at 5.1% for FY27. Quarter-wise inflation estimates are:

The central bank said inflation risks remain elevated due to higher energy prices and global uncertainties. The MPC observed that both growth and inflation forecasts face significant risks from external developments.

Focus On Global Monetary Trends

Malhotra said several major advanced economies may move towards tighter monetary policy settings amid persistent inflation concerns. He also noted that global bond markets remain cautious even as equity markets continue to receive support from artificial intelligence-led optimism.

The RBI Governor added that risk aversion and safe-haven demand have increased volatility in foreign exchange markets, contributing to depreciation pressures across several emerging market economy currencies.
With policy rates unchanged and the stance retained at neutral, the RBI’s latest decision reflects its focus on balancing inflation management with support for economic growth amid a challenging global backdrop.