RBI Keeps Repo Rate Unchanged at 5.25%, Maintains Neutral Policy Stance
Monetary Policy Decision for FY26
The Reserve Bank of India (RBI) on Friday decided to keep the policy repo rate unchanged at 5.25%, as the six-member Monetary Policy Committee (MPC) concluded its final bi-monthly meeting for the financial year 2025–26. The central bank also retained its neutral policy stance, signaling a balanced approach amid evolving economic conditions.
This decision was largely in line with market expectations, as policymakers continue to monitor inflation trends, global developments, and domestic growth indicators before taking further action.
Policy to Be Guided by Revised Inflation Data
RBI Governor Sanjay Malhotra stated that monetary policy decisions for the full financial year beginning April will be guided by new inflation data based on the revised GDP series, which is expected to be released later this month.
According to the Governor, the upcoming data will provide a clearer picture of price behavior and macroeconomic conditions, enabling the central bank to better assess inflationary pressures and growth dynamics.
Focus on Data-Driven Decisions
Malhotra emphasized that the revised data will help the RBI fine-tune its future policy actions. The central bank remains cautious and prefers to rely on updated economic indicators before making any changes to interest rates.
Optimism on Growth Outlook
Striking an optimistic tone, the RBI Governor highlighted positive developments on the trade front. He noted that recent and upcoming international trade agreements are expected to support India’s economic momentum.
“With the signing of the India–EU trade deal and the US trade agreement in sight, growth momentum is likely to be sustained for a longer period,” Malhotra said, indicating confidence in the medium-term growth outlook.
Liquidity Management Remains a Priority
The RBI reaffirmed its commitment to proactive liquidity management. The Governor stated that the central bank would continue to ensure adequate liquidity in the banking system to support productive sectors of the economy.
This approach aims to balance credit availability with financial stability, especially at a time when investment demand and consumption trends are closely linked to broader global conditions.
Stability in Government Bond Yields
The MPC also observed that government security (G-sec) yields have shown signs of stability over the past eight months. These yields have broadly tracked global bond market trends, reflecting improved alignment between domestic and international financial conditions.
Stable bond yields are seen as a positive signal for financial markets, helping contain borrowing costs and supporting orderly market functioning.
Key Takeaways for Investors
- Repo rate remains unchanged at 5.25%
- RBI continues with a neutral monetary policy stance
- Future decisions to depend on revised inflation and GDP data
- Positive outlook on growth driven by trade agreements
- Liquidity support and stable bond yields remain focus areas
Overall, the RBI’s latest policy decision reflects a cautious yet optimistic approach, balancing inflation management with growth support as the economy navigates a changing global environment.
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