RBI keeps repo rate unchanged at 5.25%

The Reserve Bank of India’s Monetary Policy Committee on Friday kept the repo rate unchanged at 5.25%.

The repo rate is the interest rate at which the central bank lends money to commercial banks. The Monetary Policy Committee reviews the rate every two months.

The committee had cut the repo rate by 25 basis points from 5.50% in December and kept it unchanged in February and April.

A basis point is one-hundredth of a percentage point. Basis points are used to describe the percentage change in the value of a financial instrument.

Central banks usually reduce repo rates to stimulate economic growth by making borrowing cheaper for individuals and businesses. This translates to lower equated monthly instalments for borrowers.

On Friday, Reserve Bank Governor Sanjay Malhotra said that the Monetary Policy Committee had decided to maintain its monetary policy stance as “neutral”.

A neutral stance means that the Reserve Bank remained flexible in adjusting policy rates based on prevailing economic conditions.

Inflation and growth

The consumer price index inflation increased to 3.4% in March and 3.5% in April 2026 mainly because of higher food inflation, the Reserve Bank said. The central bank is tasked with keeping inflation at 4%, with a tolerance band between 2% and 6%.

Fuel inflation “remained modest” as retail prices had remained largely unchanged in...

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