The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on Friday unanimously decided to keep the repo rate unchanged at 5.25 per cent, while continuing with its neutral monetary policy stance amid mounting global uncertainties, geopolitical tensions in West Asia and inflation-related concerns.

RBI Governor Sanjay Malhotra, while announcing the MPC’s decision, said the committee carefully reviewed current macroeconomic and financial conditions before deciding to maintain the policy repo rate under the Liquidity Adjustment Facility (LAF) at 5.25 per cent. As a result, the Standing Deposit Facility (SDF) rate remains at 5 per cent, while both the Marginal Standing Facility (MSF) rate and the Bank Rate continue at 5.5 per cent. Explaining the central bank’s approach, Malhotra said the global economy is facing multiple challenges, including uncertainty in international markets, disruptions in trade routes and supply chains, rising volatility and cautious sentiment among businesses.

He, however, noted that India is in a comparatively stronger position than during previous global economic disruptions due to healthier macroeconomic fundamentals. The RBI Governor stressed that the current global environment should be viewed not only as a challenge but also as an opportunity to further strengthen India’s economic resilience.

He also highlighted ongoing geopolitical tensions in West Asia, increasing energy prices and persistent supply chain disruptions as major concerns affecting the global economic outlook. According to Malhotra, central banks across the world are becoming increasingly cautious as they attempt to balance economic growth with inflation control. He added that several advanced economies could gradually shift towards tighter monetary policies.

While global stock markets remain relatively strong, largely supported by optimism around artificial intelligence-driven growth, global bond markets are witnessing pressure because of renewed inflation worries and concerns over rising debt levels, he observed. The latest policy announcement comes after the RBI’s April MPC meeting, where the committee had similarly decided to keep the repo rate unchanged at 5.25 per cent and continue with the neutral stance.

Disclaimer: This image is taken from ANI.