Repo Rate Remains Unchanged Again
India’s central bank announced its policy rate for financial year 2027 with no changes in repo rate. Moreover, RBI kept repo rate steady at 5.25 percent for the second consecutive time. Earlier, RBI reduced repo rate by 0.25 percent during December. Therefore, total reduction reached 1.25 percent during 2025 after earlier level stood at 6.50 percent.
Furthermore, Governor Sanjay Malhotra maintained SDF at 5 percent and MSF at 5.5 percent. Meanwhile, experts expect pause continuation in upcoming policy decisions.
Oil Prices Fall, Markets Surge
Before policy announcement, Trump declared a two-week ceasefire which changed global sentiment. Additionally, Iran agreed to open Hormuz Strait, easing supply concerns significantly. Consequently, crude oil prices dropped sharply by 19 percent worldwide.
As a result, US crude prices reached 91 dollars per barrel during recent trading sessions. Moreover, analysts expect further decline in oil prices ahead. Therefore, Indian stock market reacted strongly with Sensex gaining over 2700 points.
RBI Warns About Imported Inflation
However, Governor Sanjay Malhotra warned about rising inflation risks despite recent oil price correction. He stated that higher crude prices can increase imported inflation pressures significantly. Additionally, widening current account deficit may create further economic challenges.
Moreover, weak global growth may slow external demand and reduce remittance inflows. Meanwhile, high-frequency indicators until February show strong economic activity momentum.
Furthermore, private consumption and investment demand continue supporting growth strength consistently. However, conflict intensity and infrastructure damage risks may affect inflation and growth simultaneously.
RBI Slightly Cuts Growth Projections
RBI revised growth estimates slightly downward for upcoming quarters. Accordingly, first quarter growth stands at 6.8 percent, followed by 6.7 percent in second quarter.
Additionally, third quarter growth estimate reaches 7 percent, while fourth quarter may touch 7.2 percent. Overall, financial year 2027 growth estimate stands at 6.9 percent.
Previously, RBI estimated first quarter at 6.9 percent and second quarter at 7 percent.
Inflation Forecast Sees Sharp Increase
RBI increased inflation projections significantly across multiple quarters. Notably, FY2026 inflation estimate doubled from 2.1 percent to 4.6 percent.
Similarly, third quarter inflation revised sharply to 4.7 percent from earlier 0.6 percent. Moreover, fourth quarter estimate increased to 5.2 percent from previous 3.2 percent.
For current year, first quarter inflation rose from 4 percent to 4.4 percent. However, second quarter estimate reduced slightly to 4 percent from 4.2 percent.
Overall, FY2027 inflation may reach 4.7 percent, while core inflation may remain at 4.4 percent.
Pause Continues, But Risks Persist
RBI maintained rates stability, yet inflation risks continue rising quietly. Therefore, upcoming policy decisions may depend on global conditions and oil price trends.
Meanwhile, investors and consumers should watch inflation trajectory closely in coming months.
