RBI Holds repo Rate at 5.25% Amid Global Inflation and Geopolitical Tensions

The Reserve Bank of India kept its policy repo rate unchanged at 5.25% as global price pressures and the US-Iran conflict weigh on the economy.

On Wednesday, the Reserve Bank of India's Monetary Policy Committee, led by Governor Sanjay Malhotra, decided to leave the policy repo rate unchanged at 5.25% and to keep its stance neutral. The board highlighted that although headline CPI inflation has edged above target, the rise is confined to food and fuel and has not translated into widespread price pressures, while core inflation stays subdued. Growth prospects were described as robust, prompting an upward revision of the current-year GDP forecast to 6.7%.

External factors—including the ongoing US-Iran conflict, volatile oil markets, fresh US tariffs and the looming El Nino—continue to cloud the economic outlook. The RBI expects inflation to peak in the third quarter of FY27 before easing, and said any future policy shift will depend on clearer signals about inflation dynamics and growth. The committee reaffirmed its commitment to monitor developments closely and align inflation with its target.