RBI Holds Repo Rate At 5.25%, Experts See Growth Support But Warn Of Global Risks

Mumbai: The Reserve Bank of India (RBI) kept the repo rate unchanged at 5.25 percent and retained its neutral policy stance. It also raised India’s FY27 GDP growth forecast to 6.7 percent and lowered its inflation estimate to 5.0 percent from 5.1 percent.

Business Confidence

IMC Chamber of Commerce and Industry President Prof. Mahendra K Chouhan welcomed the decision, saying it balances economic growth with price stability.

He said the higher growth forecast reflects strong domestic demand, investment and services activity. Lower inflation expectations and better banking system liquidity could improve the flow of loans to businesses.

Chouhan added that a manageable current account deficit and stable financial system show that India’s economic foundation remains strong despite global uncertainty. However, the RBI must continue watching geopolitical tensions, volatile energy prices and uncertainty over US tariffs.

Rates May Stay

Shubhada Patil, Founder and Managing Director of Quantace Research, said markets should view 5.25 percent as the main scenario, but not as a guaranteed rate.

She expects an extended pause, although the RBI could raise the repo rate to 5.50 percent if crude oil prices rise, the rupee weakens, or core and services inflation becomes more widespread.

According to Patil, a longer rate pause may benefit deposit-rich banks, capital goods and infrastructure companies. A defensive rate increase could hurt NBFCs, real estate, automobiles and consumption linked to loan instalments.

Cautious Outlook

Emkay Global Financial Services Chief Economist Madhavi Arora described the policy as cautious but constructive. She said the RBI is balancing risks from the Middle East conflict, tighter global financial conditions and El Niño against resilient domestic growth and foreign currency inflows.

Arora noted that near-term price pressure may remain supply-driven unless it spreads widely.

Housing Support

Knight Frank also welcomed the rate pause. It said stable borrowing costs should improve confidence among homebuyers, businesses and investors. Policy continuity is expected to support finance, housing demand and investment across residential and commercial real estate.