Now Reading: RBI holds repo rate at 5.25% in neutral stance amid global risks
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RBI holds repo rate at 5.25% in neutral stance amid global risks
The Reserve Bank of India kept the repo rate unchanged at 5.25% for the third consecutive MPC meeting, Governor Sanjay Malhotra announced. The SDF and MSF rates also held at 5% and…
The Story in Brief
The Reserve Bank of India kept the repo rate unchanged at 5.25% for the third consecutive MPC meeting, Governor Sanjay Malhotra announced. The SDF and MSF rates also held at 5% and 5.25%. The MPC unanimously voted for a neutral stance to monitor evolving global and domestic risks, including West Asia tensions and monsoon-related food price pressures.
Economists had widely expected the status quo. Goldman Sachs' Santanu Sengupta cited stabilised rupee and crude oil below $95 per barrel as reasons for limited hawkishness. State Bank of India's Soumya Kanti Ghosh noted that soft language has become costly due to oil volatility and rupee pressure. Strong FCNR deposit flows of $40.81 billion are providing the RBI comfort on forex reserves.
The Indian Opinion
The narrative that the RBI is merely 'waiting and watching' ignores a deeper tension. On one side, food inflation fears from a weak monsoon and West Asian tensions argue for hawkishness. On the other, strong FCNR deposits and stable crude below $95 per barrel give room for caution. The real test will be the July inflation print: if it stays below 5 per cent, the 'neutral' stance may shift dovish. How will the government balance food supply management to ease the MPC's hand?
Source: businesstoday.in
This story was synthesised by AI from the source linked above.
