Noida, Apr (APAC Media): The Reserve Bank of India on Wednesday kept its benchmark repo rate unchanged at 5.25 per cent, marking the first monetary policy decision since the outbreak of the Iran war and underscoring a cautious stance in the face of heightened geopolitical and economic uncertainty.
“After carefully reviewing the latest macroeconomic and financial developments and the overall outlook, the Monetary Policy Committee unanimously decided to keep the policy repo rate unchanged at 5.25 per cent under the liquidity adjustment facility. As a result, the standing deposit facility rate remains at 5 per cent, and the marginal standing facility and bank rates continue at 5.5 per cent,” said Governor Sanjay Malhotra.
Governor Malhotra expressed that while headline inflation remains under control and near the Reserve Bank’s target, the Iran war in West Asia is creating new external pressures on India’s economy, including rising oil prices and a significant weakening of the rupee, which is affecting market sentiment.
Sanjay Malhotra also projected India’s GDP growth for the year at 6.9 per cent, with quarterly growth expected at 6.8 per cent in Q1, 6.7 per cent in Q2, 7 per cent in Q3, and 7.2 per cent in Q4.
High-frequency indicators point to continued resilience in India’s economic activity, but the supply shocks triggered by the Iran war have prompted the Reserve Bank to carefully balance growth prospects with inflationary risks.
Earlier projections had estimated India’s GDP growth to exceed 7 per cent in the upcoming fiscal year, with inflation remaining close to the central bank’s mid-target of 4 per cent.
However, analysts caution that rising energy costs and broader global market volatility could push prices higher and dampen growth momentum.
The central bank’s cautious approach reflects the need to navigate these external pressures while sustaining domestic economic stability.
The MPC’s decision comes amid broader caution in global markets, where conflict‑related uncertainty has affected asset prices and exchange rates.
The neutral stance allows the RBI flexibility to tighten or ease policy depending on incoming data and developments in external sectors. Financial markets responded modestly, with bond yields and equities adjusting to the central bank’s guidance.
The RBI will continue to monitor inflation trajectories, currency movements, and global economic developments closely, reaffirming its commitment to price stability while supporting sustained growth.
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