RBI holds repo rate at 5.25% for fourth straight meeting

The Reserve Bank of India's monetary policy committee on Wednesday kept the repo rate unchanged at 5.25% for the fourth consecutive meeting, choosing to retain a neutral stance. Governor Sanjay Malhotra said the central bank needs greater clarity on inflation and growth before any policy action. A Mint poll of 10 economists had predicted the pause amid geopolitical risks and volatile crude prices.

The MPC revised its growth forecast for FY27 to 6.7% from 6.6% in June, and lowered its retail inflation estimate to 5% from 5.1%. Economists at HSBC called the policy tone dovish, but expect rate hikes of 50 basis points over the October and December meetings. Malhotra declined to disclose the crude price assumption used in the forecasts, calling it internal market-sensitive information, after the June policy had assumed $95 per barrel.

Economists at Barclays said they took comfort from Malhotra's view that the current inflation rise is not entrenched, leaving room for a pause. State Bank of India chairman C S Setty called the decision balanced. The neutral stance allows a move in either direction based on incoming data, said Canara Bank CEO Brajesh Kumar.