RBI holds repo rate at 5.25%: 5 key takeaways from April MPC decision
New Delhi, Apr 8, 2026
The RBI held the repo rate steady at 5.25% and kept its policy stance neutral. It said global tensions and higher energy prices remain key risks for inflation and economic growth
Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday said the central bank has decided to keep the repo rate unchanged at 5.25 per cent and maintain its monetary policy stance unchanged. He said rising geopolitical tensions have increased inflation risks, even though the fundamentals of the Indian economy remain strong at present.
RBI monetary policy: Key takeaways
1. Repo rate, policy stance unchanged for the second meeting in a row
The central bank has kept the repo rate and policy stance unchanged for the second consecutive policy meeting. In February as well, the RBI had left rates unchanged and maintained a neutral stance after cutting the repo rate by 25 basis points in December last year.
With the repo rate at 5.25 per cent, the Standing Deposit Facility (SDF) rate -- the rate at which banks can park excess funds with the RBI -- remains at 5 per cent. The Marginal Standing Facility (MSF) rate, the rate at which banks can borrow from the RBI in emergencies, continues to be 5.50 per cent.
2. West Asia conflict seen as key macroeconomic risk
The RBI said the ongoing conflict in West Asia is the biggest external risk for the economy, as it could affect energy prices, trade, and financial markets.
Higher energy prices, along with rising freight and insurance costs, may increase input costs and disrupt supply chains, affecting growth. An increase in crude oil prices could widen the current account deficit, push up imported inflation and slow growth. The report warned that what starts as a supply shock could turn into weaker demand if disruptions continue.
Greater uncertainty could also lead to capital outflows, currency depreciation, tighter financial conditions and higher borrowing costs, affecting investment and demand.
3. Inflation forecast
Headline inflation has remained below target, driven by favourable food prices and contained core inflation, though recent trends show a gradual firming. The RBI expects inflation to remain within its tolerance band of 2-6 per cent in FY27. It has projected Consumer Price Index (CPI)-based inflation for FY27 at 4.6 per cent.
Inflation for Q1FY27 is estimated at 4 per cent. It may rise to 4.4 per cent in Q2 and further increase to 5.2 per cent in Q3FY27. For Q4FY27, the RBI expects inflation at 4.7 per cent.
4. GDP growth forecast
The real GDP growth for this year is projected at 6.9 per cent.
GDP growth for Q1FY27 is projected at 6.8 per cent, while Q2FY27 growth is estimated at 6.7 per cent. For Q3FY27 and Q4FY27, the RBI expects growth at 7 per cent and 7.2 per cent, respectively.
5. Measures to improve ease of doing business
The RBI proposed measures to promote ease of doing business. These include simplifying board-level rules for banks, bringing together supervisory guidelines, easing due diligence requirements for MSMEs on digital platforms, and revising capital adequacy norms.
The central bank will also remove conditions on including quarterly profits while calculating capital, and scrap the requirement for an investment fluctuation reserve. To deepen the term money market, more non-bank participants will be allowed, and borrowing limits for standalone primary dealers will be increased.
[The Business Standard]
