Central bank holds steady amid global uncertainty, projects GDP growth at 6.9%
The Reserve Bank of India (RBI) has kept the repo rate unchanged at 5.25%, in line with market expectations, following the latest Monetary Policy Committee (MPC) meeting.
The decision, announced by RBI Governor Sanjay Malhotra, was taken unanimously after two days of deliberations.
Policy stance unchanged amid global tensions
The RBI’s move comes at a time of heightened global uncertainty, particularly due to geopolitical tensions linked to the ongoing conflict involving Iran.
Governor Malhotra noted that while India’s macroeconomic fundamentals remain strong, global developments—especially rising energy prices—pose risks to growth.
Growth outlook moderated
The central bank projected India’s real GDP growth for FY27 at 6.9%, reflecting a cautious outlook.
Quarter-wise projections stand at:
- Q1: 6.8%
- Q2: 6.7%
- Q3: 7.0%
- Q4: 7.2%
The RBI also highlighted that uncertainty due to global conflict is weighing on the economic outlook.
External sector shows mixed trends
India’s forex reserves remain strong at $697.1 billion, providing a buffer against global shocks.
However, merchandise exports saw a slight contraction of 0.2% in the first two months of the year, indicating pressure on external demand.
Boost for MSMEs
In a move aimed at improving ease of doing business, the RBI announced the suspension of certain due-diligence requirements for MSMEs to help them access trade platforms more easily.
Other key rates unchanged
The RBI kept other key rates steady:
- Standing Deposit Facility (SDF): 5%
- Marginal Standing Facility (MSF): 5.5%
- Bank Rate: 5.5%
- Markets react positively
The policy decision came shortly after global markets reacted positively to a temporary easing of tensions in West Asia, following a ceasefire announcement involving Donald Trump.
Indian benchmark indices also opened higher, reflecting improved investor sentiment.
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