The Reserve Bank of India on Wednesday kept the repo rate unchanged at 5.25%, maintaining the status quo in its latest Monetary Policy Committee (MPC) meeting.
The Standing Deposit Facility (SDF) rate remains at 5%, while the Marginal Standing Facility (MSF) rate continues at 5.50%, RBI Governor Sanjay Malhotra said while announcing the MPC decision.
The Governor described 2025 as a challenging year, but noted that inflation has moderated since the October policy. He also pointed to 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,” Malhotra noted. Urban consumption is expected to strengthen further, supported by GST rationalisation and a buoyant services sector, he added.
However, the MPC flagged concerns over 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,” the Governor noted.
He also cautioned that elevated crude oil prices could add to macroeconomic pressures. “Elevated crude oil prices could increase imported inflation and widen the current account deficit,” Malhotra said.
Further, the Governor warned that weaker global growth prospects may dampen external demand and reduce remittance flows. He added that under the revised GDP series, real GDP growth for the previous year is estimated at 7.6%.
Malhotra also noted that potential disruptions in the Strait of Hormuz could weigh on growth in the current year.