RBI Keeps Repo Rate Steady at 5.25%, Signals Neutral Policy Stance Amid Growth-Inflation Balancing Act

Mumbai- The Reserve Bank of India (RBI) on Friday decided to keep the key policy repo rate unchanged at 5.25 per cent, in line with market expectations, as the Monetary Policy Committee (MPC) maintained a unanimous ‘neutral’ stance.

The Standing Deposit Facility (SDF) rate was retained at 5 per cent, while the Marginal Standing Facility (MSF) rate and the bank rate were kept at 5.5 per cent.

Announcing the outcome of the second bi-monthly monetary policy review for FY27, held from June 3 to June 5, RBI Governor Sanjay Malhotra said the committee carried out a comprehensive assessment of macroeconomic and financial conditions before deciding to maintain the status quo on rates.

He noted that while the Indian economy continues to show resilience, certain segments are beginning to reflect stress, with risks emerging on both the inflation and growth fronts.

The central bank has revised its real GDP growth projection for FY27 downward to 6.6 per cent from the earlier estimate of 6.9 per cent, citing global uncertainties, geopolitical tensions, supply chain disruptions and elevated energy prices.

Malhotra added that services exports are expected to remain steady despite external headwinds, while government measures are helping cushion the economy against global shocks. However, he warned that ongoing geopolitical tensions continue to weigh on the growth outlook.

On inflation, the RBI observed that fuel inflation remained subdued in recent months and core inflation stayed stable at around 3.7 per cent. Overall CPI inflation remains contained for now, but could edge higher toward the upper tolerance band in the coming quarters.

The Governor also flagged risks from a potentially weak monsoon and the possibility of El Niño conditions affecting price stability.

He further said private consumption remains a key support for growth, driven by resilient discretionary spending, while export performance has held up despite global conflicts. However, rising cost pressures are increasingly visible across sectors.

With inputs from IANS