Repo rate at 5.25%: RBI holds steady in 2026

MPC keeps rates unchanged

The Reserve Bank of India’s Monetary Policy Committee (MPC) voted unanimously to keep the policy repo rate unchanged at 5.25%. RBI Governor Sanjay Malhotra announced the decision after the policy meeting. The repo rate is the rate at which the RBI lends to banks for short-term needs, and it is one of the key levers for borrowing costs across the economy.

Alongside the repo decision, the MPC also kept the standing deposit facility (SDF) rate unchanged at 5%. The marginal standing facility (MSF) rate and the bank rate were also maintained at 5.5%. The committee retained its ‘neutral’ policy stance.

What the decision means for the policy corridor

By keeping the repo rate and the corridor rates unchanged, the RBI signalled continuity in its operating framework. The SDF remains the lower bound of the corridor, while the MSF is the upper bound. In practical terms, these settings influence where overnight money market rates trade and how liquidity conditions transmit into bank funding costs.

The governor said the MPC took the decision after a detailed assessment of evolving macroeconomic and financial developments and the outlook. The policy stance remaining ‘neutral’ keeps the RBI’s options open, without pre-committing to either further easing or tightening.

Meeting timeline and context

This policy review was described as the first policy meeting for FY2026-27, held between April 6 and 8. The decision also followed the RBI’s February 2026 move to maintain the repo rate at 5.25%.

The current pause comes after a cumulative 125 basis points of rate cuts during 2025. The RBI last reduced the repo rate by 25 basis points in December 2025 to 5.25%, and then maintained it in February 2026.

Key policy rates at a glance

Inflation framework and the government’s mandate

The policy decision sits within India’s inflation-targeting framework. The government has asked the RBI to maintain CPI-based retail inflation at 4%, with a margin of 2% on either side, for another five years ending March 2031. This target band shapes how the RBI balances inflation control with growth support.

Separately, one report in the provided material flagged inflation at 2.1% for FY2025-26. The same set of highlights also referenced projections around the start of the next financial year, with retail inflation seen accelerating closer to the 4% target in the first half of the year starting April.

Growth and macro signals referenced in the coverage

The compilation of policy highlights referenced a GDP growth projection of 7.4% for FY26. It also said the RBI revised up its growth forecast for Q1FY27 and Q2FY27 by 20 basis points to 6.9% and 7%, respectively.

In the same policy coverage, Governor Malhotra said forex reserves were “very healthy” at USD 723.8 billion at the end of January. He also said the current account deficit is expected to remain ‘moderate’ in the current fiscal year.

Global risks and the stated focus of the meeting

The coverage also pointed to global uncertainty as a key watchpoint. One segment said the April review would closely track the central bank’s comments on the ongoing US-Iran war, particularly around potential inflationary impacts. Another line in the policy highlights noted “rising external uncertainties” as part of the MPC’s broader assessment.

These references are important because energy and shipping disruptions can feed into domestic prices. Even when policy rates are unchanged, the RBI’s guidance on inflation risks can influence bond yields, currency sentiment, and expectations around future actions.

Market and sector reactions cited

Multiple reactions in the provided material focused on the implications of steady rates for housing and credit markets. BankBazaar CEO Adhil Shetty said a steady repo rate points to fixed deposit rates stabilising, with fewer sharp moves ahead. Real estate industry voices also described the decision as supportive for planning and demand, including comments from NAREDCO President Parveen Jain and VVIP Group’s Umesh Rathore.

Other market commentary highlighted that earlier rate cuts are still transmitting through the system. Andromeda Sales and Distribution’s Raoul Kapoor cited an illustration that a cumulative 125 basis point reduction over a 20-year loan tenure translates into an EMI reduction of approximately ₹80 per lakh per month.

Currency and liquidity-related references

The coverage included a datapoint that the rupee depreciated by about 6% in calendar year 2025 and crossed 92 against the US dollar in the prior week referenced in the live updates. It also carried remarks on liquidity management, including a view from SBI Mutual Fund’s fixed income CIO Rajeev Radhakrishnan that the RBI is expected to remain proactive on liquidity requirements and aim for closer alignment of the overnight rate with the policy rate.

A separate market view from Tata Asset Management’s Amit Somani said the policy had a “hawkish tilt” given revisions to inflation and growth forecasts. Somani also outlined a near-term trading range expectation for the 10-year G-sec of 6.60% to 6.80% and said 1-year CDs could trade around 6.85% to 7.25%.

Why the hold matters after 125 bps of cuts

After a rapid easing phase, a hold gives the RBI time to assess how prior cuts affect borrowing and spending. The coverage explicitly noted that the RBI had done “heavy lifting” on both policy rates and liquidity, while hinting that transmission remains uneven, with some banks yet to fully pass on benefits.

At the same time, keeping the stance ‘neutral’ preserves flexibility. It allows the RBI to respond to new data on inflation, growth, currency conditions, and global shocks, while maintaining the current rate corridor.

Conclusion

The RBI’s MPC has kept the repo rate unchanged at 5.25%, with the SDF at 5% and the MSF and bank rate at 5.5%, while retaining a neutral stance. The decision extends a pause that began after the 125 basis point easing cycle during 2025. The next cues for markets are expected to come from how the RBI frames inflation risks, liquidity conditions, and external uncertainties in upcoming policy communications.