Reserve Bank of India Holds Repo Rate at 5.25 Percent Amid Global Tensions

Reserve Bank of India kept the repo rate unchanged at 5.25% in its latest Monetary Policy Committee meeting, citing stable inflation and external risks from the ongoing US‑Iran conflict. The decision aligns with the central bank’s goal of supporting growth while containing price pressures.

Monetary Policy Committee members noted that global commodity price volatility and a weaker rupee could pressure inflation, but projected that headline CPI would stay within the 4% target band through the fiscal year and remain manageable for policy makers.

Governor Shaktikanta Das said the bank may keep rates low for the remainder of 2026 if inflation stays anchored, emphasizing the need for fiscal prudence and continued credit flow to small enterprises. He also warned against premature tightening that could stall recovery.

Financial markets responded with a modest rise in the rupee and steady bond yields, reflecting investor confidence that the RBI’s steady stance will anchor expectations and support growth amid geopolitical uncertainty. Analysts expect the policy to remain unchanged unless inflation breaches the target range.