Reserve Bank of India’s Monetary Policy Committee has kept the repo rate unchanged at 5.25%, maintaining a neutral stance. The decision reflects caution as global and domestic risks continue to weigh on the economy.
Governor Sanjay Malhotra highlighted challenges from the West Asia conflict, rising fuel prices, supply chain pressures and uncertain monsoon conditions. These factors are expected to push inflation higher in the coming months.
The RBI raised its inflation forecast for FY27 to 5.1%. Petrol and diesel price hikes in May are projected to add nearly 0.36% to headline inflation, with further effects on transport and production costs. Quarterly inflation estimates range from 4.2% in the first quarter to 5.9% in the third quarter.
On growth, the central bank projected GDP expansion at 6.6% for FY27. Strong private consumption, investment momentum, credit flows and government capital spending are expected to support this outlook. Quarterly growth is estimated between 6.3% and 6.8%.
The RBI warned that monsoon performance and possible El Niño effects remain key risks for agriculture, rural demand and food inflation. Adequate foodgrain stocks and reservoir levels provide some relief.
The next policy meeting will be held from August 3 to 5, where updated data on inflation and growth will guide further decisions.