At its Monetary Policy Committee (MPC) meeting on April 8, 2026, the Reserve Bank of India (RBI) unanimously decided to keep the policy repo rate unchanged at 5.25%, aligning with the expectations of all 34 analysts surveyed by Bloomberg, including UOB’s Jester Koh [1]. The standing deposit facility (SDF) and marginal standing facility (MSF) rates were also left unchanged at 5.00% and 5.50%, respectively, while the RBI maintained a neutral monetary policy stance [1].
The RBI introduced new projections based on updated GDP and CPI series. Growth is expected to moderate to 6.9% in FY27, with quarterly breakdowns of 6.8% in Q1, 6.7% in Q2, 7.0% in Q3, and 7.2% in Q4, down from 7.6% in FY26 according to the second advance estimates [1]. On the inflation front, the RBI forecasts CPI to accelerate to 4.6% in FY27 (using the new CPI series, base year 2024=100), compared to the February FY26 MPC forecast of 2.1% [1]. Upside risks to inflation are attributed to persistently elevated energy prices due to the West Asia conflict and potential adverse effects from El Niño conditions on the southwest monsoon [1].
Despite these risks, the RBI noted that underlying inflationary pressures, excluding food and energy, are expected to remain contained [1]. UOB’s projection for FY27 inflation is slightly higher at 4.8%, citing low base effects and potential tightening in food supply, particularly due to fertilizer shortages impacting crop yields during the Zaid and Kharif sowing seasons [1].
Given the uncertainty surrounding growth moderation and inflation risks, the RBI is expected to preserve policy flexibility, reinforced by its neutral stance, allowing it to respond judiciously to incoming information. UOB maintains its forecast that the RBI will keep the policy repo rate unchanged at 5.25% through 2026 [1].
CONCLUSION
The RBI’s decision to hold rates steady reflects a cautious approach amid moderating growth and rising inflation risks. Analysts expect the central bank to maintain policy flexibility and keep the repo rate unchanged through 2026. Market participants should monitor incoming data for any shifts in RBI’s stance.