RBI Holds Repo Rate at 5.25% as Inflation Risks Persist

The Story in Brief

The Reserve Bank of India kept its repo rate at 5.25% for the fourth consecutive meeting and retained a neutral stance. It raised its FY27 growth forecast to 6.7% from 6.6% and lowered its retail inflation forecast to 5% from 5.1%. The RBI cited uncertainty over the monsoon, El Niño, geopolitics, crude prices and global trade policies.

Consumer goods price increases could keep core inflation elevated, Elara Capital said, while the RBI expects recent pressure to remain mainly supply-driven. Rate forecasts differ. Elara expects no change through 2026, while Mint reported HSBC expects 50 basis points of hikes this year. The RBI said future decisions will depend on incoming data.

The Indian Opinion

The decision reflects caution, not a firm signal of either a rate cut or hike. Consumers may face higher prices if companies pass on input costs, but the extent and duration remain uncertain. Analysts’ forecasts differ because food, fuel, weather and global risks can change quickly. Strong claims about an imminent policy shift therefore go beyond the evidence currently available.

Sources (4): economictimes.indiatimes.com, hindustantimes.com, livemint.com, deccanherald.com

This story was synthesised by AI from the 4 sources linked above.

Updated: this story now draws on 4 sources.