The Reserve Bank of India's Monetary Policy Committee on Wednesday kept the key policy rate, the repo rate, unchanged at 5.25 per cent. Amid uncertainties from the West Asia conflict, the committee retained its neutral stance. It has lowered the GDP growth forecast to 6.9 per cent for FY27.
The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) on Wednesday left the repo rate unchanged at 5.25 per cent and retained its neutral stance. Governor Sanjay Malhotra told reporters, “The ceasefire, to some extent, has been taken into account. The whole implications… we’ll come to know. But the ceasefire has been taken into account in the monetary policy decision.”
The West Asia conflict led to a sharp rise in crude oil prices after Iran closed the Strait of Hormuz, which has now reopened following a two-week US-Iran ceasefire. RBI has projected GDP growth at 6.9 per cent for FY27, down from 7.6 per cent in FY26, and headline inflation at 4.6 per cent. Malhotra said, “Upside risks to inflation outlook have increased.”
The crude oil basket price is now assumed at $85 per barrel for FY27 (previously $70), and the rupee at 94 per dollar. The rupee closed at 92.58 per dollar. State Bank of India chairman Challa Sreenivasulu Setty described it as a “prudent and well-calibrated approach.”
The MPC noted that the intensity, duration and impact of the conflict have damaged energy infrastructure, weighing on the growth-inflation outlook. Markets rallied post-ceasefire, with Sensex up 3.95 per cent.
