RBI holds repo rate at 5.25%, retains neutral stance

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The Reserve Bank of India held its policy repo rate at 5.25% and retained a neutral stance, as the MPC unanimously opted to wait for clarity on the West Asia conflict's impact. The MPC raised its CPI inflation forecast for FY27 to 5.1%, citing pass-through from elevated energy prices and a deficient monsoon, while GDP growth was projected at 6.6% — a slowdown from FY26's 7.6%. With inflation expected to breach the upper tolerance band in Q3, the MPC judged that further tightening would be premature until second-round effects materialise. The decision reflects a cautious balancing act: growth remains resilient but risks have tilted to the downside, while inflation pressures are building but not yet generalised. By holding steady, the MPC is buying time to assess whether the supply shock is transitory or persistent.