RBI Monetary Policy Decision
The Reserve Bank of India (RBI) kept its benchmark repo rate unchanged at 5.25% on Wednesday, in line with market expectations. The six‑member Monetary Policy Committee (MPC) voted unanimously to retain the policy rate and to maintain a “neutral” stance.
Governor Sanjay Malhotra highlighted that the ongoing conflict in West Asia, uncertainty over U.S. tariff measures, and disruptions to global trade routes and supply chains have rendered the global economic environment increasingly unstable, leading to volatility in commodity prices, currencies and financial markets.
He noted that headline inflation has risen above the RBI’s target, as anticipated, although first‑quarter inflation was marginally below the RBI’s own projections because cost‑pressures have only partially passed through to prices. The recent price uptick was primarily driven by food and fuel, while underlying inflationary pressures remained benign.
The central bank projects that inflation will continue to rise in the coming months, reaching a peak in the third quarter of the current financial year before easing thereafter.
RBI also affirmed that India’s economy remains underpinned by resilient domestic demand, ongoing expansion in manufacturing and services, and strong export performance, giving the board latitude to keep policy settings unchanged while it closely monitors evolving inflation dynamics and global risks.
The policy decision coincided with a recovery in the Indian rupee, which has rebounded from recent record lows thanks to a sharp fall in oil prices and measures announced by the RBI in June aimed at attracting foreign capital and supporting the currency.