RBI Policy Meeting 2026: 5 key takeaways on repo rate, GDP growth, inflation and central bank decisions

The Reserve Bank of India (RBI) on Wednesday decided to keep the policy repo rate unchanged at 5.25 per cent, citing the ongoing conflict in West Asia and its impact on global supply chains and energy prices.

The Monetary Policy Committee (MPC) held its 60th meeting from April 6 to 8 under the chairmanship of RBI Governor Sanjay Malhotra.

The MPC members—Dr. Nagesh Kumar, Saugata Bhattacharya, Prof. Ram Singh, Dr Poonam Gupta, and Indranil Bhattacharyya attended the meeting.

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The committee also kept the standing deposit facility (SDF) rate at 5.00 per cent and the marginal standing facility (MSF) and Bank Rate at 5.50 per cent. The central bank maintained a neutral stance.

Global Outlook

The RBI noted that the conflict in West Asia has caused severe disruption in global supply chains, creating challenges for the world economy. Rising commodity prices and slowing global growth pose a difficult environment for policymakers, who face the task of controlling inflation while supporting growth.

Global financial markets have experienced heightened volatility. Sovereign bond yields have hardened, equity markets have corrected, and the US dollar has strengthened as a safe-haven currency. The RBI warned that further escalation or geographical widening of the conflict could increase downside risks for the global economy.

Domestic Economic Growth

On the domestic front, India’s economy remained resilient in 2025-26. Real GDP is estimated to have grown 7.6 per cent, according to the Second Advance Estimates (base year 2022-23). Private consumption and fixed investment were the main contributors to growth, while net external demand was weak. Real GVA growth is estimated at 7.7 per cent, driven by a strong services sector and robust manufacturing activity.

For 2026-27, the RBI projected real GDP growth at 6.9 per cent. Quarterly projections are 6.8 per cent for Q1, 6.7 per cent for Q2, 7.0 per cent for Q3, and 7.2 per cent for Q4.

The central bank noted that elevated energy and commodity prices, supply disruptions in the Strait of Hormuz, and global financial market volatility could weigh on growth. However, momentum in the services sector, higher capacity utilisation in manufacturing, and healthy corporate and financial institution balance sheets are expected to support domestic demand.

Inflation Outlook

CPI inflation for 2026-27 is projected at 4.6 per cent. The RBI expects quarterly inflation at 4.0 per cent in Q1, 4.4 per cent in Q2, 5.2 per cent in Q3, and 4.7 per cent in Q4.

Headline inflation remained contained at 3.2 per cent in February 2026, up from 2.7 per cent in January, largely due to base effects. Food inflation rose slightly, while core inflation excluding food and fuel remained stable at 2.1 per cent, indicating subdued underlying pressures.

The central bank highlighted risks to inflation from persistently high global energy prices, disruptions in commodity markets, and possible El Niño conditions affecting the southwest monsoon. Core inflation for 2026-27 is projected at 4.4 per cent, with pressures expected to remain moderate.

Rationale for Policy Decision

The MPC noted that geopolitical tensions and the West Asia conflict had heightened uncertainties since the last policy meeting. While headline inflation remains below the target, upside risks have increased due to rising energy prices and potential weather-related impacts on food prices.

Domestic economic indicators show continued momentum in private consumption and investment, but higher input costs and supply-chain disruptions could constrain growth. Government measures to support exports and maintain supply chains are expected to mitigate some adverse impacts.

The MPC emphasised that the Indian economy is better placed today to withstand external shocks. The committee decided to retain the neutral stance to allow flexibility in responding to incoming data while remaining vigilant on risks to growth and inflation.

Future Outlook and Next Steps

The MPC will continue monitoring the evolving situation in West Asia and its impact on energy markets, supply chains, and domestic financial conditions. The minutes of the MPC meeting will be published on April 22, 2026. The next policy meeting is scheduled for June 3 to 5, 2026.

Governor Sanjay Malhotra said that while the fundamentals of the Indian economy are strong, global uncertainties and elevated commodity prices necessitate caution. The central bank will continue to balance growth support with price stability in its policy framework.