Key repo rate held at 5.25 percent with neutral stance

India's Monetary Policy Committee maintained the policy repo rate at 5.25 percent, keeping the standing deposit facility rate at 5.00 percent and the marginal standing facility rate at 5.50 percent.

Real GDP growth for 2026-27 is projected at 6.7 percent, supported by strong Q1 performance, robust corporate sales growth of 21.9 percent, and steady domestic demand.

Meanwhile, headline CPI inflation is projected at 5.0 percent for 2026-27, driven higher in the near term by food and fuel supply shocks stemming from the West Asia conflict.

Core inflation excluding precious metals remains benign at 2.3 to 2.5 percent, reassuring policymakers that broader price pressures remain contained.

Renewed escalation in the West Asia conflict has heightened global market volatility and energy prices, creating persistent uncertainty for international trade.

Despite these external shocks, India's external sector remains stable, supported by foreign exchange reserves of 692.9 billion dollars and gross FDI inflows of 30.7 billion dollars in Q1. To further strengthen financial architecture, draft guidelines were introduced to resume urban cooperative bank licensing alongside updated credit monitoring rules.