The Reserve Bank of India’s decision to maintain the repo rate at 5.25 per cent, along with a neutral stance, has been commended by analysts for its balanced strategy in managing inflation and supporting economic growth. Trade association ASSOCHAM lauded the move as a measured step towards enhancing stability in the macroeconomic landscape, emphasizing its role in sustaining growth momentum and ensuring price stability. Saurabh Sanyal, Secretary General of ASSOCHAM, highlighted that this decision reflects the central bank’s thorough evaluation of current macroeconomic conditions and its flexibility in responding to evolving economic scenarios.
Experts widely anticipated the RBI’s decision to hold rates steady, considering the potential risks associated with El Nino, crude oil prices, and global uncertainties. Madan Sabnavis, Chief Economist at Bank of Baroda, suggested a reduced likelihood of further rate cuts, citing the RBI’s concern over El Nino’s impact on inflation. He also projected a GDP growth of 6.9 per cent and an inflation rate of 4.6 per cent. Sabnavis emphasized the balanced view on economic prospects, signaling resilience and stability.
Despite having ample buffer stocks, the RBI expressed concerns about El Nino as a significant inflation risk, according to Vinay Pai, MD & Head of Fixed Income at Equirus Group. Pai characterized the central bank’s stance as a cautious “wait and watch” approach amid ongoing geopolitical uncertainties. Garima Kapoor, Deputy Head of Research and Economist at Elara Capital, cautioned that the RBI’s growth projections for FY27 might require revision, particularly due to delays in full pre-war energy export volumes, which could take 3–6 months to normalize. Kapoor also shared her forecast, stating that the Monetary Policy Committee (MPC) is unlikely to raise policy rates unless CPI inflation consistently exceeds 6 per cent and inflation expectations become destabilized.
