RBI Holds Repo Rate at 5.25% Again — Cites Iran War, Supply-Side Inflation Risks

8 April 2026
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Source: RBI Monetary Policy Statement (60th MPC Meeting, 6–8 April); Business Today; SCC Online; India.com; BankersAdda; APAC News Network

In its first policy review of FY 2026-27, the RBI unanimously held the repo rate at 5.25% with a neutral stance. Governor Sanjay Malhotra cited the Iran conflict as creating heightened global uncertainties including disruptions in energy markets, rising commodity prices, and currency depreciation pressures. While headline inflation remains below target, the RBI flagged upside risks. The RBI explicitly noted that the shock is primarily supply-driven, making monetary policy a “blunt and potentially ineffective tool” to address it — an unusually candid statement. Rate hikes would only be considered if “second-round inflation effects” materialise. Growth projections: Q1 FY27 at 6.9%, Q2 at 7.0%. The RBI warned that the fiscal deficit may widen due to higher subsidy requirements for fuel and fertiliser. Next MPC meeting: 3–5 June 2026.

💰 Impact on your wallet: Your home loan EMI stays unchanged. The message is clear: no more rate cuts until the geopolitical situation stabilises. If oil prices remain high, the next move could even be a hike (though unlikely unless inflation crosses 5%). For FD investors, rates are stable at current levels — now is a reasonable time to lock in a 1–2 year FD. For new borrowers, the current rate environment is unlikely to improve soon — don’t delay a necessary home purchase hoping for further cuts.

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