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RBI Keeps Repo Rate Unchanged at 5.25%, Signals Cautious Approach Amid Global Uncertainty

New Delhi, June 5: The Reserve Bank of India (RBI) on Friday left the benchmark repo rate unchanged at 5.25%, maintaining its neutral policy stance as policymakers weighed inflation risks, a weakening rupee, and rising geopolitical tensions in West Asia.

The decision was announced by RBI Governor Sanjay Malhotra following the three-day meeting of the Monetary Policy Committee (MPC). The committee unanimously voted to keep rates on hold for the second consecutive policy review.

The central bank's decision comes at a time when global crude oil prices remain elevated and uncertainty surrounding the conflict in West Asia continues to impact financial markets. RBI officials indicated that these factors could create fresh inflationary pressures in the coming months.

While keeping interest rates unchanged, the RBI revised its inflation outlook upward and lowered its economic growth forecast, reflecting concerns about external risks and domestic challenges. The central bank now expects inflation to average around 5.1%, while GDP growth is projected at 6.6% for the current financial year.

For borrowers, the policy decision means there will be no immediate relief on home loan, auto loan, or personal loan EMIs. Lending rates linked to the repo rate are expected to remain largely unchanged for now.

The RBI also announced measures aimed at supporting the rupee and attracting foreign capital inflows. These steps are intended to strengthen currency stability amid global market volatility and rising oil prices.

Following the announcement, Indian equity markets remained positive, with investors viewing the policy stance as supportive of economic stability. Banking and financial stocks were among the sectors that reacted positively to the decision.

Market experts believe the RBI is adopting a wait-and-watch approach, balancing the need to control inflation while supporting economic growth. Future policy decisions are likely to depend on inflation trends, crude oil prices, monsoon performance, and global economic developments.

Key Highlights of RBI Policy

• Repo Rate: 5.25% (unchanged)

• Policy Stance: Neutral

• Inflation Forecast: Raised to 5.1%

• GDP Growth Forecast: Reduced to 6.6%

• No immediate EMI relief for borrowers

• Additional measures announced to support the rupee

The next RBI Monetary Policy Committee meeting will be closely watched for signals on whether the central bank may consider a policy shift later this year.