RBI Holds Repo Rate at 5.25% After 125 Basis Points Cut in Easing Cycle

The Reserve Bank of India's Monetary Policy Committee on Friday kept the repo rate unchanged at 5.25 percent in its first monetary policy review meeting, maintaining the pause after cumulative rate cuts of 125 basis points during the ongoing monetary easing cycle.

The decision comes just after the Union Budget 2026 presentation and the announcement of the India-US trade deal.

Rate Cuts Already Delivered

The central bank has already slashed the repo rate by 125 basis points (1.25 percent) during the current easing cycle, making borrowing cheaper for consumers and businesses. The cumulative cuts mean loan EMIs have become more affordable for borrowers across housing, auto, and personal loan segments.

Inflation at Historic Lows

The decision to hold rates comes amid benign inflation conditions. Consumer Price Index inflation has remained subdued, touching its lowest level in the current data series in October last year. The favorable inflation trajectory had enabled the RBI to pursue aggressive rate cuts earlier in the cycle.

GDP Growth Outlook Strong

India's growth prospects remain robust, with expectations of over 7 percent GDP growth this financial year. If achieved, India will retain its position as the world's fastest-growing major economy for another consecutive year.

Key Factors Under Review

The MPC's policy statement will be closely watched for:

• Revised inflation forecasts
• Updated GDP growth projections
• Forward guidance on future rate actions

Policy Timing

This MPC meeting holds significance as it follows two major economic developments—the Union Budget 2026 and the landmark India-US trade deal that reduces tariffs on Indian goods to 18 percent while boosting bilateral trade commitments.

The banking system's primary watchdog will provide detailed assessments of how these developments impact India's economic outlook.