Reserve Bank of India Holds Repo Rate at 5.25% Amid Global Risks

The Reserve Bank of India’s Monetary Policy Committee kept the policy repo rate unchanged at 5.25% on June 5 2026, maintaining a neutral stance despite heightened external risks. The decision follows a three‑day review that highlighted the impact of the West Asia conflict, rising crude oil prices and a weakening rupee, which has slipped to around 96.86 per U.S. dollar.

The RBI also revised its FY27 GDP growth forecast down to 6.6% from 6.9% and noted retail inflation at 3.48%, close to its 4% target. To address balance‑of‑payments pressures, the central bank introduced a package of measures to attract foreign capital, including expanded eligibility for government bonds, tax breaks on capital gains and withholding tax for foreign investors, a subsidised window for NRI deposits, cheaper forex swaps for PSUs, and faster repatriation of export proceeds. HSBC estimates the steps could improve the balance of payments by over $30 billion in the short term.

Economists and industry experts broadly welcomed the pause, saying it balances growth support with caution on inflation and external vulnerabilities. The unchanged repo rate also means home‑loan EMIs will stay stable in the near term, preserving borrowing cost relief achieved from earlier rate cuts.