RBI MPC Meeting 2026: Repo Rate Unchanged For 2nd Time In Row To 5.25%, Policy Stance Neutral | Key Highlights

RBI MPC Outcome: The Monetary Policy Committee of the Reserve Bank of India kept the repo rate unchanged at 5.25% while maintaining a neutral stance, Governor Sanjay Malhotra announced on Wednesday, April 8. This marks the second consecutive policy meeting with a status quo decision. However, the central bank has revised its real GDP growth projection for FY2026-27 upward.

The MPC meeting, which commenced on April 6 and concluded on April 8, unfolded amid escalating global tensions triggered by the Iran-US conflict, adding complexity to the RBI's policy outlook.

RBI MPC Meeting Outcome Key Highlights

-The RBI MPC kept the repo rate unchanged at 5.25% with a neutral stance. Additionally, the standing deposit facility (SDF) rate remained at 5% and marginal standing facility (MSF) rate and the Bank Rate at 5.5%.

- Underlining the risk of upside in inflation, Governor Sanjay Malhotra said that geopolitical uncertainties have heightened and pose an upside risk to inflation. Increased energy price and possible weather disturbances can affect food a price in the coming months. "While commodity prices, such as of metal and gold, have moderated, financial markets have become more volatile. Equities registered a broad-based correction. Sovereign bond yields, already elevated due to long-run fiscal sustainability concerns, driven by inflation fears, have hardened across major economies," said Sanjay Malhotra.

-The RBI MPC has fixed real GDP growth for 2025-26 at 7.6%. Real GDP growth for 2026-27 is projected at 6.9%, with Q1 at 6.8%; Q2 at 6.7%; Q3 at 7.0%; and Q4 at 7.2%.

"Further escalation and wider spread of the conflict, heightened volatility in global financial markets and weather-related events, however weigh on the domestic growth outlook. Risks to the baseline projections are tilted to the downside, with uncertainty remaining elevated due to the ongoing West Asia conflict," said Malhotra.

-CPI inflation for 2026-27 is projected at 4.6% with Q1 at 4.0%; Q2 at 4.4%; Q3 at 5.2%; and Q4 at 4.7%. Core inflation is projected at 4.4%. "Food price outlook remains comfortable in the near term with robust rabi production, adequate reservoir levels and comfortable buffer stocks of foodgrains18. The likely emergence of El Niño conditions could pose a risk," said Malhotra.

Impact of Iran-US War on Indian Economy

RBI's decision has come hours after US President Donald Trump announced a ceasefire. In one of his social media posts, Donald Trump stated that he "agreed to suspend the bombing and attack of Iran for a period of two weeks."

Prolonged Iran-US war can significantly fuel the crude oil price and may pose a threat to imported inflation and even widen the ongoing conflict, said Malhotra while explaining the impact of Iran-US war on Indian economy.

"First, elevated crude oil prices could increase imported inflation and widen the current account deficit. Second, disruptions in energy markets, fertilisers and other commodities may adversely impact industry, agriculture and services, reducing domestic output. Third, heightened uncertainty, increased risk aversion and safe haven demand could impact domestic liquidity conditions, economic activity, consumption and investment. Fourth, weaker global growth prospects may dampen external demand and reduce remittance flows. Finally, adverse spillovers from global financial markets could tighten domestic financial conditions and raise the cost of borrowing. Overall, the initial supply shock can potentially transform into a demand shock over the medium term if the restoration of supply chains is delayed."

Ceasefire between Iran and US sparked a strong rebound in the Indian stock market, which opened 3.5% higher, sharp correction of close to 15% in crude prices and a strong jump in gold prices.

In the February meeting, the RBI MPC decided to keep the policy repo rate unchanged at 5.25%. The central bank had also maintained a neutral stance as it continued to watch inflation trends and overall economic growth. The central bank had announced a 125 bps reduction in interest rates in the financial year 2025-26.

GR Poll Indicates No Rate Cut In April

Over 92% Goodreturns poll participants expect the RBI to maintain a status quo as geopolitical concerns raise inflationary pressures and put India at risk of 'stagflation.' Notably, the Iran-US war in West Asia entered its second month in April with no signs of easing.

"The RBI's decision to keep the repo rate unchanged at 5.25% shows a careful balance between controlling inflation and supporting growth. The timing is important: global oil prices fell after a temporary ceasefire in the Iran-US conflict, but uncertainty about how long this will last remains high. For India, the pause provides some relief, as imported inflation pressures are lower for now while domestic demand stays strong," explained Rajeev Sharan, Head of Research, Brickwork Ratings.

In its previous MPC meeting, held in February, the RBI kept the repo rate unchanged with a neutral stance. The decision was made against the backdrop of a benign inflation outlook, healthy domestic growth momentum and external prospects. This time, Iran-US war is likely to cast influence on RBI's inflation and GDP growth forecasts, experts warn.