RBI Guv signals lower rates for longer, trade deal growth boost

MPC keeps repo, stance unchanged; awaits new data series

- MANOJIT SAHA

The six-member monetary policy committee (MPC) of the Reserve Bank of India (RBI) unanimously decided to keep the policy repo rate unchanged at 5.25 per cent on Friday, adding that evolving macroeconomic conditions and outlook based on new growth and inflation data series will shape the future course of monetary policy.

The MPC also retained its policy stance as neutral. Between February and December 2025, the RBI had reduced the repo rate by 125 basis points (bps) in order to support growth with inflation prints remaining benign.

"Based on a comprehensive review of the domestic macroeconomic conditions and the outlook, the MPC is of the view that the current policy rate is appropriate," RBI Governor Sanjay Malhotra said while announcing the policy decision. "Going forward, the MPC will be guided by the evolving macroeconomic conditions and the outlook based on data from the new series," he said.

The RBI raised Q1 and Q2 growth projection for FY27 by 20 bps, citing various factors, including the trade deals with the United States (US) and the European Union (EU).

"The recently concluded India-EU free trade agreement (FTA) and the prospective India-USA trade deal along with several other trade agreements will support exports over the medium-term... growth momentum is likely to be sustained for a longer period," Malhotra said.