RBI holds repo rate at 5.25% for fourth time

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The Reserve Bank of India's Monetary Policy Committee has kept the repo rate unchanged at 5.25 per cent, Governor Sanjay Malhotra announced. This is the fourth consecutive time the rate has been held, with the MPC unanimously deciding to maintain a neutral stance. The decision was widely expected as the central bank weighs global oil volatility, weak monsoon risks, and inflation that touched 4.8 per cent in June, above its comfort level. The RBI raised its growth forecast for the year to 6.7 per cent, betting on robust private consumption and exports, despite headwinds from West Asia tensions and subpar rains.

Economists note that while food and fuel prices drive up headline inflation, core inflation remains subdued at around 2.3-2.5 per cent. The MPC said future policy will be 'data dependent'. Strong foreign currency deposit inflows have helped stabilise the rupee, reducing the need for a hawkish turn. However, the RBI expects inflation to climb until the December quarter before easing, with monsoon performance and crude oil prices remaining key monitorables.