Summary of this article
RBI has kept the repo rate unchanged at 5.25 per cent.
GDP growth forecast raised, while FY27 inflation estimate lowered.
RBI announced UCB licensing and interest rate regulation proposals.
The Reserve Bank of India (RBI) has kept the policy repo rate unchanged at 5.25 per cent after the Monetary Policy Committee (MPC) unanimously voted to hold the key policy rate. The central bank has retained its neutral policy stance. The repo rate was last revised in December 2025, when it was reduced to 5.25 per cent from 5.50 per cent, a reduction of 25 basis points (bps).
Repo Rate Stays Unchanged
The repo rate stays at 5.25 per cent, while the Standing Deposit Facility (SDF) rate is at 5 per cent. The Marginal Standing Facility (MSF) rate and the Bank Rate stay at 5.50 per cent. The MPC has unanimously voted to retain the neutral stance, indicating that future policy decisions will depend on incoming economic data and the evolving inflation outlook.
Saurabh Jain, co-founder and CEO, Stable Money, said that the RBI’s decision to keep the repo rate unchanged “provides stability and predictability for fixed-income investors”. He said, “A stable rate cycle is also supportive for the bond market, allowing investors to benefit from predictable income while diversifying across different tenures and issuers."
Growth Forecast Revised Upwards
The RBI has raised its real gross domestic product (GDP) growth projection for 2026-27 to 6.70 per cent, from 6.60 per cent estimated earlier. Quarterly growth is projected at 7 per cent in the first quarter, and 6.40, 6.50 and 6.80 per cent in the second, third and fourth quarters, respectively. The central bank attributed the improved outlook to steady domestic demand, manufacturing activity, investment, healthy credit growth and exports.
Inflation Estimate Lowered
The MPC has lowered its consumer price index (CPI) inflation projection for 2026-27 to 5 per cent, down by 10 bps from the previous estimate. Inflation is projected at 4.70 per cent in the second quarter, 5.90 per cent in the third quarter and 5.50 per cent in the fourth quarter, while core inflation is estimated at 4.30 per cent.
The central bank noted that food and fuel prices are expected to remain the main drivers of headline inflation during the year.
Global Risks Stay On RBI’s Radar
The policy statement highlighted uneven monsoon conditions, geopolitical tensions, volatile crude oil prices, supply chain disruptions and uncertainty around global trade as key risks to the outlook.
Shauryam Gupta, CEO, Rupeezy, said, “Food inflation and crude ... [are to be watched closely]. Supply-side pressures, particularly volatile food prices driven by uneven monsoon distribution and elevated crude prices due to geopolitical risks (even though crude prices are becoming loose now), will remain key watchouts.”
Fresh Regulatory Measures Proposed
Apart from the monetary policy decision, RBI has issued draft guidelines to resume licensing of new urban co-operative banks (UCBs). It has also proposed standardising interest rate regulations across different categories of regulated entities. The draft proposals have been released for public feedback before being finalised. These measures form part of the RBI’s broader regulatory agenda announced alongside the MPC decision.
