MPC keeps repo rate unchanged at 5.25%, cuts growth forecast amidst West Asia ceasefire
India's Monetary Policy Committee (MPC) unanimously decided to maintain the repo rate at 5.25% and continue its neutral stance. This decision was influenced by the temporary ceasefire in the West Asia conflict, which RBI Governor Sanjay Malhotra confirmed was factored into the monetary policy. The MPC noted that the conflict's intensity and duration, along with damage to energy and infrastructure, pose risks to inflation and growth. Consequently, the real GDP growth forecast for 2026-27 was reduced by 70 bps to 6.9%, and the CPI inflation projection for 2026-27 was hiked to 4.5% from 4.4%. Geopolitical uncertainties and increased energy price pressures are identified as key upside risks to the inflation outlook.
Key Points
- The Monetary Policy Committee (MPC) unanimously decided to keep the repo rate unchanged at 5.25%.
- The MPC also maintained its neutral monetary policy stance, considering the West Asia ceasefire.
- India's real GDP growth forecast for 2026-27 was cut to 6.9% (by 70 bps).
- The CPI inflation projection for 2026-27 was hiked to 4.5% from 4.4% earlier.
- Geopolitical uncertainties and energy price pressures are identified as key upside risks to the inflation outlook.
Exam Facts
- Repo rate: 5.25%.
- Real GDP growth forecast for 2026-27: 6.9% (reduced by 70 bps).
- CPI inflation forecast for 2026-27: 4.5% (hiked from 4.4%).
- RBI Governor: Sanjay Malhotra.
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