RBI Holds Interest Rates Steady Amid Global Uncertainty, Growth Outlook Moderates

RBI of India has kept the repo rate unchanged at 5.25% amid global geopolitical tensions, while projecting a slight dip in GDP growth and manageable inflation levels.

April 9, 2026 | Mumbai The Reserve Bank of India has decided to maintain the repo rate at 5.25%, marking the second consecutive pause in lending rates as global uncertainties continue to weigh on economic prospects. The decision was taken unanimously by the Monetary Policy Committee during its meeting chaired by Governor Sanjay Malhotra. The central bank cited heightened geopolitical tensions involving the United States, Israel, and Iran as a key factor influencing its cautious stance. The ongoing instability is expected to cast a shadow on the Indian economy in the financial year 2026–27.

While the RBI has retained its GDP growth projection for 2025–26 at 7.6%, it anticipates a moderation to 6.9% in the current fiscal year. Despite global headwinds, the Indian economy is expected to remain resilient, supported by steady performance in the services and manufacturing sectors. Inflation, however, remains a concern. The RBI has projected the inflation rate for 2026–27 at 4.6%, driven largely by rising crude oil prices in international markets and the potential impact of El Niño conditions affecting rainfall. Quarterly estimates indicate inflation at 4% for April–June, 4.4% for July–September, 5.2% for October–December, before easing slightly in early 2027.

The central bank emphasized that while inflationary pressures persist, they are likely to remain within a manageable range. Maintaining rate stability, the RBI noted, is essential to balancing growth and inflation amid uncertain global conditions. Economists believe the RBI’s decision reflects a calibrated approach, allowing time to assess evolving geopolitical developments and their economic impact. The pause in rate hikes is also expected to provide some relief to borrowers, as lending rates remain unchanged for now. Overall, the policy signals stability and cautious optimism, even as external risks continue to challenge the economic outlook.

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