RBI Holds Rate at 5.25%, Citing Strong Economy Yet Inflation Risks
RBI Holds Rate at 5.25%, Citing Strong Economy Yet Inflation Risks
RBI MPC keeps policy rate at 5.25% as India's economy stays resilient, but West Asia tensions may affect inflation and energy costs, says Malhotra.
The Monetary Policy Committee (MPC) unanimously voted to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 5.25%. The standing deposit facility (SDF) rate remains at 5% and the marginal standing facility (MSF) rate and the Bank Rate stay at 5.50%. The decision came after a detailed assessment of evolving macroeconomic and financial developments and the outlook. The RBI signaled a continued preference for a measured stance to support growth while keeping an eye on inflation.
The Indian economy is described as being on a strong footing, with high-frequency indicators through February 2026 pointing to ongoing momentum in economic activity. Growth impulses are supported by robust private consumption and investment demand, suggesting that domestic demand remains a key driver for expansion.
However, the RBI also highlighted upside risks to inflation and the growth outlook from the prolonged conflict in West Asia and the resulting damage to energy infrastructure. This geopolitical tension could influence energy prices and supply, potentially affecting price trajectories and the overall growth path. Governor Malhotra emphasized that the central bank would monitor these developments closely and adjust policy if needed to maintain price stability while supporting growth.
Market participants will be watching the data flow in the coming months as the RBI balances the twin goals of anchoring inflation and sustaining economic activity. The MPC’s stance reflects confidence in the current momentum but acknowledges external risks that could alter the inflation outlook.
