RBI Holds Repo Rate Steady at 5.25%, Projects 6.9% GDP Growth for Current Fiscal
The Reserve Bank of India (RBI) maintained its key policy rate at 5.25% during the first bi-monthly monetary policy review of the fiscal year 2026-27. RBI Governor Sanjay Malhotra announced this decision on April 8, 2026, emphasizing a neutral stance by the Monetary Policy Committee (MPC), which voted unanimously to keep the repo rate unchanged.
Other rates related to the policy, such as the standing deposit facility rate, remain at 5%, while the marginal standing facility rate and the Bank Rate continue at 5.50%. The MPC meeting, chaired by Governor Malhotra, began on Monday and concluded with a cautious approach amid global uncertainties.
Growth and Inflation Outlook
The RBI projected India’s real Gross Domestic Product (GDP) growth at 6.9% for the current fiscal year. The GDP expansion for the last financial year is estimated at 7.6%. The central bank also forecasted consumer price index (CPI) inflation to average 4.6% in the ongoing fiscal.
Governor Malhotra highlighted risks to inflation stemming from persistently high energy prices, which are linked to the ongoing conflict in West Asia and the potential development of El Niño weather patterns. These factors could push inflation above projections.
Impact of Global Factors and Policy Approach
Regarding the West Asia conflict, the RBI adopted a wait-and-watch position owing to evolving conditions and their impact on India’s growth and inflation dynamics. The Governor noted that this conflict could hamper growth by raising input costs, including energy, freight, and insurance expenses. Supply chain disruptions may also reduce the availability of critical inputs needed for downstream industries.
Despite these challenges, the RBI stressed that India’s economy has strong fundamentals that improve its resilience to external shocks compared to previous years. Measures by the government aimed at supporting exports and securing supply chains are expected to help offset negative effects from the conflict.
Exchange Rate Policy
The Governor addressed the depreciation of the Indian rupee in the fiscal year 2025-26, noting it fell more than average compared to earlier years. He reaffirmed the RBI’s existing exchange rate policy, which favors a market-determined exchange rate without targeting any specific level or range.
The RBI commits to intervening in foreign exchange markets only to temper excessive or disruptive volatility, avoiding measures to fix currency values. This approach aims to prevent self-fulfilling cycles that may intensify currency swings beyond what economic fundamentals justify.
The RBI continues to monitor incoming data and balance the risks to growth and inflation closely. The decision to keep the repo rate unchanged reflects this careful assessment amid uncertain global conditions.
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