The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) on Friday unanimously decided to keep the policy repo rate unchanged at 5.25 per cent, while retaining its neutral policy stance amid heightened global uncertainty, geopolitical tensions in West Asia and persistent inflation concerns.
Announcing the decision, RBI Governor Sanjay Malhotra said the MPC, after assessing evolving macroeconomic and financial conditions, voted unanimously to maintain the repo rate under the Liquidity Adjustment Facility (LAF) at 5.25 per cent.
“Consequently, the Standing Deposit Facility (SDF) rate remains at 5 per cent and the Marginal Standing Facility (MSF) rate and the Bank Rate at 5.5 per cent,” Malhotra said.
Explaining the rationale behind the decision, the Governor highlighted the challenging global economic environment characterised by disruptions to trade routes and supply chains, increased financial market volatility and subdued business sentiment.
“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 emphasise that the Indian economy entered this episode of global turbulence with much better fundamentals than in previous similar episodes,” he said.
Malhotra noted that while India remains relatively well-positioned to withstand external shocks, the current period of global turbulence presents an opportunity to further strengthen the country’s economic resilience.
“It is important to not only confront and address these challenges, but also, at the same time, take this as an opportunity to further enhance our resilience,” he added.
The RBI Governor also flagged the continuing geopolitical impasse in West Asia, rising energy prices and supply chain disruptions as key risks to the global economic outlook.
According to him, monetary policy across major economies has become increasingly cautious as central banks balance the need to support growth while containing inflation. He noted that several advanced economy central banks may increasingly tilt towards monetary tightening in response to inflationary pressures.
Malhotra further observed that while global equity markets remain buoyant, supported by optimism around artificial intelligence-driven growth, bond markets continue to face pressure amid concerns over inflation and debt sustainability.
The latest decision follows the MPC’s April policy review, when the committee had also unanimously voted to keep the repo rate unchanged at 5.25 per cent and maintain its neutral policy stance.
(With inputs from ANI)
