Summary of this article
RBI keeps repo rate unchanged at 5.25 per cent
GDP growth seen at 6.90 per cent, inflation risks persist
Forex reserves steady, new curbs imposed on speculative positions
Reserve Bank of India (RBI) Governor Sanjay Malhotra announced the results of the first bi-monthly Monetary Policy Committee (MPC) meeting for the financial year 2026-27 (FY 27) on April 8, 2026. The MPC reviewed the current domestic and global economic conditions and decided to keep the repo rate unchanged at 5.25 per cent.
Incidentally, this was the first MPC meeting in the wake of the geopolitical crisis in West Asia which began on February 28, 2026 when the US and Israel bombed Iran. Fluctuating energy prices have also influenced the discussions. The central bank has stated that its primary focus has remained on maintaining economic stability. Experts noted that this is not a routine pause but a calibrated move.
Adhil Shetty, CEO of BankBazaar, said the MPC has “flagged a supply shock driven by the West Asia conflict,” adding that the unanimous decision reflects a “deliberate choice to wait and watch before acting in either direction.”
Rumki Majumdar, Economist at Deloitte India, said the decision reflects a “conscious prioritisation of stabilising the economy amid external risks,” adding that volatility in commodity markets, especially oil, has warranted a cautious approach.
Repo Rate Maintained
The MPC decided to keep the repo rate unchanged at 5.25 per cent. The decision to maintain this rate was unanimous among all six members of the committee. The repo rate is the interest rate at which RBI lends money to commercial banks.
By holding the rate steady, RBI has willed to provide a stable environment for borrowing. The committee has also decided to maintain its neutral policy stance. This stance has been in place since February. It has also allowed RBI to adjust its policy based on future economic data. The committee noted that the current rate levels remain appropriate for the present economic situation.
For borrowers, the pause helps retain benefits from earlier rate cuts. Shetty points out, “Home loan borrowers on repo-linked products are already seeing the benefit of the 125 basis points delivered since early 2025.” He adds, “Borrowers still on MCLR-linked products are not seeing this benefit automatically and should switch to a repo-linked loan without delay.”
Real GDP Growth Projections
RBI has provided projections for the real gross domestic product (GDP) growth for the current financial year. The central bank expects the real GDP growth for FY 27 to be 6.90 per cent. Malhotra said that India continues to receive foreign direct investment (FDI) projects.
RBI has also noted an increase in private sector investment across various industries. The growth projection for the first quarter of FY 27 is expected around 6.80 per cent, he said. For the second quarter, RBI expects a growth of 6.70 per cent and for the third quarter, around 7 per cent. These data have been derived from current economic indicators. RBI has further highlighted that the domestic economy has shown signs of steady activity despite external challenges.
Consumer Price Index Inflation Outlook
RBI has continued to monitor inflation as part of its monetary policy framework. Headline inflation has currently remained below the 4 per cent target. However, the regulator has identified risks from rising global commodity and crude oil prices.
These risks have been linked to the ongoing conflict in West Asia. RBI has projected the consumer price index (CPI) inflation for FY27 at 4.60 per cent and for the first quarter of FY27 at 4 per cent. For the second, third and last quarter, the estimates are 4.40 per cent, 5.20 per cent, and 4.70 per cent, respectively. RBI has said that it has monitored these trends to align inflation with its long-term targets.
Financial Market Regulations Have Been Enforced
Malhotra said the MPC also discussed the status of India’s foreign exchange reserves (forex) and financial market stability. As on April 3, 2026, the forex reserves were at $697.1 billion. RBI said that its forex policy has not changed and it intervened in the forex market only to manage excessive volatility. It has not set a specific target level for the value of the Indian rupee, it further said.
Malhotra added that RBI has also announced several regulatory measures to address speculative activity in the markets. There has been a ceiling of $100 million on the net open positions of banks.
RBI has also introduced new limitations on non-deliverable forwards (NDF). Additionally, RBI has prohibited the rebooking of cancelled contracts. It said it has also ensured there is enough liquidity in the banking system to support the credit requirements of the productive sectors of the economy.
Ashish Narain Agarwal, Founder and MD of PropertyPistol, said the decision “underscores the importance of stability” and helps keep EMIs predictable, which supports homebuyer confidence, especially in mid-income and affordable housing segments.
Vishal Raheja, Founder and MD of InvestoXpert Advisors, said the policy reflects a “shift from stimulus-driven growth to stability-led consolidation.” He added that a predictable rate environment enables better investment planning and supports sustainable returns in real estate.
