Reserve Bank of India holds repo rate at 5.25 percent

The Reserve Bank of India (RBI) has maintained its key repo rate at 5.25 percent, marking the fourth consecutive meeting with no change. The central bank cited muted inflationary pressures and a resilient economy, marginally lowering its inflation forecast for the year ending March to 5 percent, which remains within its 2% to 6% tolerance band.

RBI leadership noted that India’s economic growth remains stable and the country possesses sufficient foreign exchange reserves to manage external shocks. This policy stance differs from several regional central banks that have tightened monetary policy in response to geopolitical tensions, as the RBI views recent conflicts primarily as temporary supply-side shocks.

Regarding technological shifts, the RBI has urged Indian banks to accelerate the adoption of artificial intelligence while cautioning against its inherent risks. These risks include biased decision-making, data privacy concerns, cybersecurity threats, and the potential for systemic failure due to heavy reliance on a limited number of AI models or vendors.

In the real estate sector, the decision to hold rates is expected to provide stability for homebuyers and developers, particularly in emerging markets where certainty regarding borrowing costs is critical for long-term planning and affordability.