Blitz Bureau
NEW DELHI: RBI Governor Sanjay Malhotra announced on January 6 that the Monetary Policy Committee (MPC) has unanimously decided to keep the policy repo rate unchanged at the current level of 5.25 per cent and stick to the neutral monetary policy stance. The RBI Governor said that the decision to maintain the status quo in the policy rate had been taken after careful consideration of the macroeconomic conditions and the outlook for the economy ahead.
He said that since the last monetary policy meeting in December, global headwinds have intensified, but the trade deals signed by the government augur well for the economy going ahead.
Malhotra further stated that the RBI has decided to stick to a “neutral policy stance”. A neutral stance requires neither stimulation nor curbs on liquidity as it strikes a fine balance between controlling inflation without hurting growth. The RBI has been sticking to the neutral stance as it was waiting for the earlier monetary policy easing to still play out, and the unfolding of trade-related implications.
Malhotra said the inflation level was under control and below the RBI tolerance band. The inflation outlook was benign, and the RBI’s projection for CPI inflation has been revised for Q1 and Q2 of the 2026-27 to 4 per cent and 4.2 per cent, respectively. He said the minor increase in the projection was due to the expected increase in the prices of precious metals. However, the underlying inflation is expected to be well within the tolerance level.
The RBI Governor also said that the growth outlook for the Indian economy is favourable and expected to be driven by domestic factors. The Monetary Policy Committee had reduced the repo rate by 25 basis points to 5.25 per cent from 5.5 per cent in the December review to spur growth in the economy.