RBI keeps repo rate unchanged at 5.25 pc, maintains 'Neutral' stance
Mumbai, June 5
The Reserve Bank of India's Monetary Policy Committee on Friday unanimously decided to keep the policy repo rate unchanged at 5.25 per cent, in line with the expectations from economists.
The Standing Deposit Facility (SDF) rate was set at 5 per cent, while the Marginal Standing Facility (MSF) rate and the bank rate stood at 5.5 per cent.
Announcing the decision of the second bi-monthly monetary policy meeting for FY27, held from June 3-June 5, RBI Governor Sanjay Malhotra said the MPC had undertaken a detailed assessment of evolving macroeconomic and financial conditions before voting unanimously to leave the policy repo rate under the Liquidity Adjustment Facility (LAF) unchanged at 5.25 per cent.
Malhotra said while the economy remains resilient, incipient stress in certain segments are there and there are considerable risks surrounding both inflation and growth assessments.
The RBI revised its real GDP growth forecast for FY27 to 6.6 per cent, down from the earlier projection of 6.9 per cent, reflecting the impact of heightened global uncertainty, geopolitical tensions, supply chain disruptions, and rising energy prices.
The governor also expressed confidence that services exports will remain resilient despite global uncertainties and highlighted that the government has taken measures to help the economy cope with external shocks.
He said external factors continue to pose downside risks to the growth outlook amid elevated geopolitical tensions and global uncertainty. On the inflation front, he noted that fuel inflation remained muted in March and April, while core inflation was stable at 3.7 per cent during the two months.
On inflation, the governor said CPI inflation remains low at present, though baseline projections indicate that inflation could move closer to the upper tolerance band in the third quarter.
He cautioned that the outlook remains clouded by the forecast of a sub-normal monsoon and the possible emergence of El Nino conditions.
The RBI governor also said that private consumption remains supportive of growth, aided by resilient discretionary spending, while merchandise exports have continued to register growth despite the ongoing geopolitical conflict. However, he noted that the impact of rising cost pressures is becoming increasingly visible across sectors.
— IANS
Reader Comments
As a small business owner, I was hoping for a rate cut to ease loan EMIs. But I understand the caution - El Nino and global supply chains are unpredictable. At least they maintained neutral stance, so maybe next time we'll see some relief. 😐
RBI is being too conservative! Private consumption is strong, exports are growing, yet they cut GDP forecast from 6.9% to 6.6%. This sends wrong signal to investors. Need more aggressive stance to boost growth, especially in manufacturing sector. 🏭
Finally some stability! As a home loan borrower, I was worried about rate hikes. 5.25% repo means my EMI stays same for now. But governor's warning about Q3 inflation hitting upper band is scary - hope they're prepared. Monsoon prediction is worrying too. ☔
Appreciate the balanced approach. With geopolitical tensions and rising energy prices, keeping repo unchanged is prudent. But why no mention of food inflation? That's what common man feels. Fuel is muted, but dal, sabzi prices are skyrocketing! 🌾🍅
Services exports resilient - good news! But we need to strengthen domestic manufacturing too. Make in India needs more policy support. Private consumption is fine, but rising cost pressures across sectors will hurt eventually. RBI should focus more on growth than just inflation targeting. 📈
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