The Reserve Bank of India kept interest rates unchanged at 5.25% amid a three-month-long Middle East conflict that has disrupted energy supplies, driving crude oil prices higher and creating inflationary pressures.
While announcing the second bi-monthly MPC decision for FY27, the RBI unanimously maintained a neutral stance, raised its FY27 inflation forecast, and cut its FY27 GDP forecast.
Here is a look at how India’s finance industry reacted to the RBI’s latest decision on repo rate-
HDFC Securities–
Dhiraj Relli, MD & CEO, HDFC Securities, said that the RBI’s decision to pause was both sensible and widely anticipated. He said that by pairing a neutral stance with a 50-basis-point upward revision to its baseline CPI forecast, the MPC signalled a clear-eyed acknowledgement of heightened global uncertainty — encompassing West Asia spill overs, rising energy costs, and monsoon-related risks.
“Rather than reaching for the blunt instrument of a rate hike, which risks choking a resilient domestic recovery (with the FY27 growth projection brought down to 6.6%), the Governor has opted to lean on administrative levers and capital-flow management to stabilise the currency and contain inflation.” Relli added.
Bandhan Bank-
Siddhartha Sanyal, Chief Economist & Head Research, Bandhan Bank, said that the RBI delivered a somewhat hawkish pause, indicating a lower threshold for future rate hikes as inflation is expected to remain close to 6% in H2.
“It rightly abstained from using interest rates to defend the INR, instead prioritizing its core mandate of inflation and growth while managing currency pressures through FX intervention and capital flow tools,” Sanyal said.
Standard Chartered Bank-
PD Singh, CEO, India & South Asia, Standard Chartered Bank, said that the MPC announcement on a scheme to attract 3–5-year retail foreign currency term deposits should be a game changer as this would help attract FCY flows into the country while allowing Banks to bolster their deposit growth and meet client funding requirements.
He added that the other measures announced such as relaxations in FPI investments in government securities along with the government measures on taxation and the facility to incentivise external borrowings by public sector entities would further help in the same.
“The MPC decision to maintain status quo on policy rates comes from a prudent stance by the regulator as it would like to wait and watch how the evolving West Asia scenario plays out in the coming time and whether a long-term impact on India macro is likely.” Singh said.
Axis Securities–
Axis Securities says that the current circumstances, such as the West Asia War and rupee depreciation, are likely to prompt the regulator to reverse the rate cycle at upcoming policy meetings. However, the RBI has reiterated that any further policy action will largely remain data-driven, it added.
Muthoot Finance
Mr. George Alexander Muthoot, Managing Director, Muthoot Finance, said that a stable rate environment supports business confidence and sustained credit demand, while the neutral stance appropriately keeps options open as the global situation evolves.
“This policy reinforces confidence in India’s macroeconomic fundamentals, and we expect growth momentum and credit offtake to remain resilient in the near term.”