The Reserve Bank of India (RBI) on Thursday kept the repo rate unchanged at 5.25% in its first monetary policy review after the Union Budget 2026, signalling continuity in its approach amid a relatively stable growth and inflation outlook.
Announcing the decision after the three-day meeting of the Monetary Policy Committee (MPC), RBI Governor Sanjay Malhotra said the central bank has retained a “neutral” stance, indicating that interest rates are likely to remain steady in the near term unless economic conditions change materially. The decision was widely expected by markets.
Malhotra said India continues to be among the fastest-growing major economies, supported by resilient domestic demand and easing external pressures. He noted that reduced tariff-related stress following a recent trade agreement with the United States has helped improve the outlook for exports and overall growth, even as global uncertainty persists.
On inflation, the RBI projected retail inflation at around 4% for the first quarter of FY2026–27, slightly higher than earlier estimates, and 4.2% for the following quarter. For the current financial year, inflation is expected to remain benign, with the central bank maintaining confidence that price pressures are broadly under control.
The RBI pegged real GDP growth for the current year at 7.4%, while growth in the next financial year is projected at 6.9% in the first quarter and 7% in the second quarter. The central bank said underlying data suggests growth momentum could be sustained over the medium term.
Beyond rates, the governor announced consumer-friendly measures in the pipeline. The RBI plans to propose a framework to compensate customers for losses of up to Rs 25,000 in small-value digital transaction frauds. Draft guidelines are also expected on curbing mis-selling by lenders and tightening norms around loan recovery practices and the use of recovery agents.
Markets took comfort from the RBI’s steady stance, as investors and borrowers look for policy stability in the post-budget period.
