RBI's Status Quo On Lending Rate Signals Balanced Approach Amid Global Uncertainties: Experts

The Reserve Bank's decision to keep its benchmark repo rate unchanged signals a balanced approach against the backdrop of potential risks for India's economy emanating from geopolitical uncertainties, experts and industry said on Wednesday.

The Reserve Bank of India kept its benchmark policy rate unchanged for a fourth consecutive meeting, opting to wait for greater clarity on whether higher energy costs triggered by the Iran war feed into broader inflationary pressures.

The six-member Monetary Policy Committee, headed by Governor Sanjay Malhotra, unanimously voted to keep the policy repo rate unchanged at 5.25% and retained its "neutral" policy stance.

"The policy reflects a balanced view of upside risks facing the economy. While global uncertainties continue, RBI's decision responds appropriately to macroeconomic developments. The MPC underscored that it will maintain a close vigil outlook and remain resolute in its commitment to align inflation with the target," said Ranjeet Mehta, CEO & Secretary General, PHDCCI.

Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank said, the tone of RBI policy has been well balanced, highlighting the risks and hence the policy decisions ahead being data dependent.

She sees a 50 basis points rate hike in second half of FY27, especially as 1QFY28 inflation also continues to look above 5%.

Rahul Goswami, CIO & MD, India Fixed Income, Franklin Templeton, said, by maintaining a neutral stance, the central bank has preserved flexibility rather than signalling a tightening bias.

"We remain constructive on high quality fixed income instruments and expect yield movements to be driven more by global geo-political developments that may impact inflation outcome, than by expectations of future policy actions," he added.

Prashant Pimple, Chief Investment Officer - Fixed Income, Baroda BNP Paribas Mutual Fund, said with the neutral stance retained in the current policy, the bar for rate move in 2026 calendar year appears higher.

Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India, said the decision underscores the central bank's balanced approach of supporting economic growth while remaining watchful of evolving global and domestic risks.

"A stable interest rate environment is likely to reinforce buyer confidence, provide greater certainty to businesses and investors, and ensure continued access to affordable financing. For the real estate sector, this policy continuity is expected to sustain housing demand and investment activity, particularly across residential and commercial segments, while supporting the sector's long-term growth trajectory," he said.

D Muthukumaran, Group Chief Financial Officer, Essar, termed RBI's upward revision of the GDP growth outlook, despite global uncertainties, as a positive affirmation of India's economic resilience.

"Equally welcome is the decision to hold the repo rate steady through an active investment cycle, even with inflationary pressures at play, as it provides businesses with much-needed policy stability. For infrastructure and other long-gestation sectors, a stable cost of capital is as important as sustained public investment in supporting long-term growth," he added.