The Reserve Bank of India kept the repo rate unchanged at 5.25%,
Governor Sanjay Malhotra cited inflation risks from the West Asia conflict, elevated crude prices, weak monsoon prospects and a fragile rupee.
Growth and inflation forecasts were revised, while borrowers gain short-term EMI relief and savers see stable deposit returns.
RBI Hits Rate Pause Again: What Changes for Home Loan, FD and Investments
The MCP slashed its growth forecast for the fiscal year 2027 to 6.6% from 6.9%, projecting quarterly growth at 6.6%, 6.3%, 6.5% and 6.8%.
RBI holds repo rate File Photo representative image
Summary
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The Reserve Bank of India kept its benchmark repo rate unchanged at 5.25%, with all six members of the Monetary Policy Committee (MPC) voting to hold rates and maintain a neutral stance.
RBI Governor Sanjay Malhotra attributed heightened uncertainties from the ongoing West Asia conflict as the primary reason for the pause, citing elevated crude oil prices, supply-chain disruption and rising inflationary and fiscal pressures on import-dependent economies like India.
The MCP slashed its growth forecast for the fiscal year 2027 to 6.6% from 6.9%, projecting quarterly growth at 6.6%, 6.3%, 6.5% and 6.8%. Inflation for this year is now forecasted at 5.1%, up from the earlier expectation of 4.6%.
Retail Inflation stood at 3.48% in April, close to the RBI's 4% medium-term target. However, the RBI Governor Sanjay Malhotra flagged risks of further price increases due to an expected weak monsoon and elevated fuel costs.
What Will Change After Rate Pause?
The paused repo rate offers relief for borrowers of home, car and personal loans as EMIs linked to the repo rate are unlikely to increase immediately.
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Business borrowing costs are also expected to remain stable in the near term, as government bond yields.
For savers, fixed deposit rates are likely to stay close to current levels rather than climb further. Savings account rates remain broadly unchanged.
In a separate measure, the RBI raised investment limits for NRIs and Overseas Citizens of India in the stock market, removing the requirement for SEBI registrations.
Persistent Global Risks
RBI Governor warned that while India's position remains relatively strong, the global environment has deteriorated, and that policymakers should use this time to strengthen the economic capabilities.
Major central banks across countries are increasingly leaning towards monetary tightening as they navigate the trade-off between supporting growth and containing inflation.
Global bind markets remain under pressure from renewed inflation concerns, even as equity markets stay buoyed by AI driven optimism.
Based on MCP recommendation, RBI has reduced the repo rate by 25 basis points each in February, April and December 2025, and by 50 basis points in June 2025.
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