RBI Maintains Repo Rate at 6.5%: Growth with Caution Amid Global Uncertainty

📰 Detailed Report

In its first bi-monthly monetary policy of FY 2025-26, the Reserve Bank of India (RBI) has decided to maintain the repo rate at 6.5%, continuing its cautious stance despite improved inflation trends and a robust GDP outlook.

🗣️ “The Indian economy remains resilient, but global uncertainty persists. Our focus is on sustaining growth while ensuring price stability,” said RBI Governor Shaktikanta Das.

📉 What is Repo Rate & Why It Matters?

Repo Rate is the rate at which RBI lends money to commercial banks. A higher rate discourages borrowing (to control inflation), while a lower rate boosts spending and growth.

Currently:

• Repo Rate: 6.5%
• Reverse Repo Rate: 3.35%
• CPI Inflation: 4.8% (March 2025)
• GDP Growth (FY24-25): Estimated at 6.8%

📊 Key Announcements from RBI:

1. No Change in Key Rates
   • Repo Rate: 6.5% (unchanged for 5th time)
   • CRR & SLR: No change
2. Inflation Targeting
   • RBI aims to keep retail inflation under 4% in the coming quarters.
3. Growth Projection
   • India’s FY25 GDP growth retained at 6.8%, with strong rural demand and manufacturing rebound.
4. Digital Rupee Expansion
   • Plans to extend the CBDC (e₹) pilot to rural banking sectors.
5. Focus on NBFC Regulation
   • Tighter scrutiny for non-banking finance companies to prevent credit bubbles.

📈 Market Reaction

The decision was well received by the financial markets.

• Sensex surged 612 points to 76,418.
• Nifty 50 climbed 188 points, closing at 22,506.
• Banking, Auto, and FMCG stocks led the rally.

“This is a vote of confidence in India’s macroeconomic stability,” said Radhika Rao, Senior Economist at DBS.

🌎 Global Context

RBI’s decision comes amid:

• US Fed holding interest rates at 5.25%–5.50%.
• Rising tensions in the South China Sea affecting global oil prices.
• Eurozone narrowly escaping recession.

Despite global headwinds, India’s economy continues to be the fastest-growing major economy globally.

📌 Conclusion

The RBI has chosen stability over stimulus, signaling confidence in India’s growth story while keeping inflation in check. As the world battles economic uncertainty, India’s cautious but optimistic approach may prove to be a blueprint for balanced growth.