RBI monetary policy: Repo rate unchanged at 5.25% amid West Asia crisis

India’s Reserve Bank of India (RBI) held its policy repo rate at 5.25% on Friday, maintaining a neutral stance amid rising global uncertainties and geopolitical tensions in West Asia. The Monetary Policy Committee (MPC) unanimously voted to keep the rate unchanged, with Governor Sanjay Malhotra stating that the decision followed a detailed assessment of macroeconomic conditions. The Standing Deposit Facility (SDF) rate remains at 5%, while the Marginal Standing Facility (MSF) rate and Bank Rate stay at 5.5%. Malhotra highlighted challenges in the global economy, including disrupted trade routes, market volatility, and cautious business sentiment, though he noted India’s stronger fundamentals compared to past crises. The governor pointed to ongoing geopolitical tensions in West Asia, rising energy prices, and supply chain disruptions as key risks to global economic stability. He also observed that major central banks are balancing growth support with inflation control, with some advanced economies potentially tightening monetary policy further. Global equity markets remain buoyant due to AI-driven growth optimism, but bond markets face pressure from inflation concerns and debt sustainability worries. The RBI’s decision follows its April meeting, where the repo rate was also held steady at 5.25% with a neutral stance. Malhotra stressed the need to address current challenges while strengthening India’s economic resilience. He urged policymakers to use this period of turbulence to enhance long-term stability.