Reserve Bank of India Governor Sanjay Malhotra said Friday that the Monetary Policy Committee kept the repo rate steady at 5.25% [1].
The decision to maintain current interest rates comes as the central bank faces a more challenging inflation environment. By holding the rate, the RBI seeks to balance economic growth with the need to keep price stability within its target range.
The policy decision was announced at 10 a.m. on Friday [3], followed by a press conference at 12 p.m. [4] where Governor Malhotra said the committee's findings and the broader economic outlook for the country.
While the repo rate remains unchanged, the central bank has revised its inflation outlook upwards. The RBI now expects inflation to reach 5.1% for FY27 [2]. This adjustment indicates that the committee anticipates persistent price pressures in the coming fiscal year, a shift that may influence future rate decisions.
The Monetary Policy Committee met in June 2026 [5] to evaluate the domestic and global economic conditions. The decision to keep the repo rate at 5.25% [1] suggests a cautious approach to monetary tightening despite the rising inflation forecast.
Governor Malhotra said the current stance is designed to communicate the bank's commitment to inflation control while supporting the economy. The updated projection of 5.1% [2] serves as a critical signal to markets regarding the bank's expectations for consumer price index movements.
Market analysts will now focus on whether this revised inflation outlook will lead to a policy pivot in subsequent meetings. The stability of the 5.25% [1] rate provides a temporary plateau for borrowing costs across the Indian banking sector.
“The RBI now expects inflation to reach 5.1% for FY27.”
The RBI's decision to hold the repo rate despite raising the inflation forecast suggests a 'wait-and-see' approach. By maintaining the 5.25% rate, the bank is avoiding a potential shock to economic growth, but the upward revision to 5.1% for FY27 indicates that the central bank is not yet confident that inflation is fully under control, potentially paving the way for future rate hikes.
