RBI holds repo rate at 5.25%; Growth strong, inflation eases despite global risks

New Delhi: The Reserve Bank of India (RBI) on Wednesday decided to keep the repo rate unchanged at 5.25%, maintaining the status quo in its latest Monetary Policy Committee (MPC) meeting.

RBI Governor Sanjay Malhotra said the Standing Deposit Facility (SDF) rate remains at 5%, while the Marginal Standing Facility (MSF) rate stays at 5.50%.

Describing 2025 as a challenging year, the Governor noted that inflation has eased since the October policy and highlighted improved efficiency in the banking system as a key support for the economy.

“High-frequency indicators up to February indicate sustained strength in economic activity,” Malhotra said.

He added that growth continues to be driven by strong private consumption and steady investment demand.

“Growth impulses remain supported by robust private consumption and sustained investment demand,” he noted. Urban consumption is likely to strengthen further, aided by the beneficial impact of GST rationalisation and the buoyant services sector, the Governor added.

However, the MPC cautioned against global uncertainties.

“The intensity and duration of the conflict, along with possible damage to energy and other infrastructure, pose risks to both inflation and growth outlooks,” Malhotra said.

He also warned that elevated crude oil prices could increase imported inflation and widen the current account deficit, and weaker global growth may dampen external demand and reduce remittance flows.

Under the revised GDP series, the RBI estimates real GDP growth for the previous year at 7.6%. Potential disruptions in the Strait of Hormuz could also weigh on growth in 2026.

Despite these risks, the Governor highlighted that business sentiment remains optimistic, supported by proactive government measures to ensure the availability of key inputs across critical sectors, helping contain supply chain disruptions.

What this means to you?

For consumers and investors, stable rates mean loan EMIs remain steady and borrowing costs are predictable, while the economy continues to show resilience through strong private consumption and investment. However, global risks like oil prices and trade disruptions are still factors to watch.