RBI Keeps Repo Rate Unchanged at 5.25% and Maintains a Neutral Stance Amid Global Uncertainty

The Reserve Bank of India (RBI) has decided not to change interest rates for the second time this financial year. In its latest monetary policy announcement, RBI Governor Sanjay Malhotra said that all members of the Monetary Policy Committee (MPC) agreed to keep the repo rate unchanged at 5.25 per cent. The committee also decided to maintain a neutral policy stance.

The central bank has lowered the GDP growth projection to 6.6 per cent from the earlier estimate of 6.9 per cent, citing evolving economic conditions.

At the same time, the RBI has increased its inflation forecast. The Consumer Price Index (CPI)-based inflation target for the current fiscal has been raised to 5.1 per cent from the earlier projection of 4.6 per cent.

In another key decision, the RBI has relaxed investment norms for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs). The central bank has increased the investment limits for these investors in equity instruments.

The governor stated, “The global economy has been shaped by heightened uncertainty, disruptions to key trade routes and supply chains, increased market volatility, and cautious business sentiment.” Let me, at the very outset, emphasize that the Indian economy entered this episode of global turbulence with much better fundamentals than in previous similar episodes.”