RBI's MPC retains repo rate at 5.25%, lowers FY27 GDP growth forecast to 6.6%
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) unanimously decided to keep the policy repo rate unchanged at 5.25% under the liquidity adjustment facility (LAF). Consequently, the standing deposit facility (SDF) rate remains at 5% and the marginal standing facility (MSF) rate and bank rate at 5.50%. The MPC also maintained its neutral stance. RBI Governor Sanjay Malhotra noted the global environment's deterioration, extended supply chain disruptions, and elevated energy prices, leading to a moderation in growth and an increase in inflation projections. The real GDP growth forecast for FY27 was lowered to 6.6% from the earlier 6.9%, while CPI inflation for FY27 is projected at 5.1%, 50 basis points higher than before. The MPC highlighted risks from the West Asia conflict, sub-normal monsoon forecast, and El Niño.
Key Points
- The RBI's Monetary Policy Committee (MPC) unanimously decided to keep the key policy repo rate unchanged at 5.25%.
- The MPC maintained a neutral stance, indicating a wait-and-watch approach amidst global uncertainties.
- The real GDP growth forecast for FY27 has been lowered to 6.6% from an earlier projection of 6.9% due to global headwinds.
- CPI inflation for FY27 is projected to be 5.1%, an increase of 50 basis points from the previous forecast, driven by elevated energy prices and supply disruptions.
- Risks to the economic outlook include the West Asia conflict, sub-normal south-west monsoon forecast, and El Niño.
Exam Facts
- Repo rate: 5.25% (unchanged).
- Standing Deposit Facility (SDF) rate: 5%.
- Marginal Standing Facility (MSF) rate and Bank rate: 5.50%.
- Real GDP growth projection for FY27: 6.6% (down from 6.9%).
- CPI inflation projection for FY27: 5.1% (up by 50 basis points).
- RBI Governor: Sanjay Malhotra.
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