RBI MPC holds repo rate at 5.25% amid West Asia war

The Reserve Bank of India (RBI) concluded its Monetary Policy Committee (MPC) meeting on Wednesday, keeping policy settings unchanged as geopolitical uncertainty weighed on the global outlook. Governor Sanjay Malhotra said the committee voted unanimously to keep the policy repo rate unchanged at 5.25%. The decision came after two days of deliberations by the six-member panel.

The policy outcome was closely watched amid concerns that the West Asia conflict could push up commodity prices and complicate the inflation trajectory. RBI maintained its neutral stance, signalling flexibility as it tracks incoming data. The central bank also reiterated elements of its financial market and exchange-rate approach, emphasising continuity rather than a shift in framework.

What the RBI decided on rates and stance

The MPC voted unanimously to keep the policy repo rate unchanged at 5.25%. The RBI also decided to continue with the neutral stance. In its policy communication, the MPC described the approach as prudent, reflecting a “wait and watch” posture in a period of changing circumstances.

The RBI has kept the rate unchanged in the August, October and February 2026 monetary policies as well, according to the updates cited. With the repo rate steady, attention has shifted to how the RBI reads the balance between inflation risks and growth support, especially under elevated geopolitical uncertainty.

Policy corridor: SDF, MSF and Bank Rate

Alongside the repo decision, the Standing Deposit Facility (SDF) rate remains at 5.00%. The Marginal Standing Facility (MSF) rate and the Bank Rate remain at 5.50%. These rates define the operating corridor for overnight liquidity management.

The RBI reiterated that it remains vigilant and will closely monitor incoming information, assessing the balance of risks. The central bank’s messaging stressed flexibility under the neutral stance rather than committing to a pre-set path.

Inflation snapshot: new CPI series and recent prints

The RBI referred to inflation using the new CPI series (2024=100). Under this series, headline inflation increased to 3.2% in February 2026 from 2.7% in January. The policy updates also noted that headline inflation remains contained and below the RBI’s 4% target, while highlighting upside risks.

Among the risks cited were food-price pressures linked to weather disturbances. The RBI’s framing suggests it is wary of sudden shocks that could reverse the recent low inflation readings.

RBI projections: FY27 inflation and growth estimates

In the policy communication, RBI projected CPI inflation for financial year 2027 at 4.6%. The quarterly path cited was Q1 at 4.0, Q2 at 4.4, Q3 at 5.2 and Q4 at 4.7. Core projection was cited at 4.4.

On growth, the updates cited a real GDP growth estimate of 7.6% for last year. RBI also estimated real GDP growth for FY27 at 6.9%. The RBI’s commentary linked the growth outlook to business expectations and the government’s focus on scaling up domestic manufacturing.

West Asia conflict and the global uncertainty channel

Governor Malhotra said global economic conditions and sentiments have soured after the outbreak of the West Asia conflict. The RBI noted that these developments have adversely impacted the growth and inflation outlook. In a separate expectation-setting comment cited in the coverage, the April MPC was seen as operating under a “cautious, wait-and-watch approach amid global uncertainties.”

Ranen Banerjee, Partner and Economic Advisory Leader at PwC India, told ANI that GDP growth could face a potential impact of 0.5% to 1% as geopolitical risks rise. He also said monetary policy action may not be effective in addressing challenges arising from the ongoing West Asia conflict.

Exchange-rate policy: smoothing volatility, not targeting levels

The RBI reiterated that its exchange-rate policy remains unchanged. The central bank said intervention in the foreign exchange market is aimed at smoothing excessive and disruptive volatility without targeting any specific level or band for the exchange rate. It added that this is consistent with its long-standing policy of market-determined exchange rates.

The Governor also stressed that the RBI is not signalling any “structural change” and remains committed long-term to the development, broadening and deepening of markets, including the internationalisation of the rupee.

What economists expected going into the meeting

Ahead of the decision, economists largely expected the RBI to maintain the repo rate at 5.25% and keep the policy stance unchanged. The updates cited a survey of 15 institutions by ET that anticipated a hold in rates and stance under the first monetary policy of FY27.

Other pre-policy notes cited in the coverage pointed to global tensions, pressure on bond yields and domestic currency fluctuations as reasons for caution. The meeting was also expected to focus on possible inflationary impacts of the US-Iran war, as referenced in the live coverage.

Key numbers at a glance

Timeline and what comes next

The MPC met on April 6 and 7, and briefly on the morning of April 8, to deliberate and decide on the policy repo rate. The next meeting of the Monetary Policy Committee is scheduled for June 3 to 5, 2026.

The RBI’s near-term focus, based on its statement, is to stay vigilant on evolving global conditions while tracking the growth-inflation mix through incoming data.

Market impact and why the decision matters

A unanimous hold at 5.25% and continuation of the neutral stance keeps the RBI’s policy options open without committing to either easing or tightening. The statement’s emphasis on upside inflation risks, including food-price risks and elevated crude oil prices, explains why the MPC chose to wait and watch despite inflation being below the 4% target.

At the same time, the RBI’s reiteration that intervention is meant to smooth volatility, not target a level, matters for currency and bond market expectations during periods of heightened global risk. For borrowers and lenders, unchanged policy rates also signal continuity in near-term funding conditions, while the next MPC meeting in June will be a key checkpoint for how the RBI updates its assessment.

Conclusion

The RBI’s Sanjay Malhotra-led MPC kept the repo rate unchanged at 5.25%, retained the neutral stance, and maintained the policy corridor with SDF at 5.0% and MSF and Bank Rate at 5.5%. The central bank anchored its decision in a cautious reading of global uncertainty linked to the West Asia conflict and upside risks to inflation. The next MPC meeting, scheduled for June 3 to 5, 2026, will provide the next formal update on how these risks are evolving.