RBI Holds Repo Rate at 5.25% Amid Global Monetary Policy Divergence
The Reserve Bank of India (RBI) on Friday kept the policy repo rate unchanged at 5.25%, signalling caution and continuity as global monetary policy paths increasingly pull in different directions.
Announcing the decision, RBI Governor Sanjay Malhotra said the Monetary Policy Committee (MPC) voted unanimously to maintain the rate while sticking to a neutral policy stance, reflecting a careful reading of both domestic strength and external risks.
“Since the last policy meeting, external headwinds have intensified,” Malhotra said, even as he pointed to the successful completion of recent trade deals as a positive for India’s medium-term outlook. “Overall, the near-term domestic inflation and growth outlook remains positive.”
With the repo rate unchanged, the Standing Deposit Facility (SDF) stays at 5%, while the Marginal Standing Facility (MSF) and Bank Rate remain at 5.5%.
The decision underscores the RBI’s balancing act. On the home front, inflation remains comfortably low. Consumer Price Index (CPI) inflation for December 2025 stood at 1.33%, offering policymakers breathing room. Growth indicators, too, have stayed supportive, reinforcing the case against any immediate policy shift.
Globally, however, the backdrop has grown more complex.
February 2026 marked a clear divergence in global monetary policy. The US Federal Reserve and the Bank of England opted to hold rates steady after a series of cuts in 2025. In contrast, the Reserve Bank of Australia surprised markets by delivering its first rate hike in two years, signalling a turn toward tighter policy.
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Against this uneven global landscape, the RBI chose restraint—preferring stability over premature moves.
The central bank reiterated that future policy decisions would remain data-dependent, guided by evolving macroeconomic conditions. Its mandate, Malhotra stressed, remains unchanged: maintain price stability while supporting economic growth, even as global uncertainties continue to cloud the outlook.
(With inputs from ANI)