RBI Holds Rates, Keeps Neutral Stance as Inflation Risks Rise

The Reserve Bank of India's Monetary Policy Committee kept the repo rate unchanged at 5.25% today and retained its neutral policy stance, saying heightened uncertainty over inflation and growth warranted caution despite rising price pressures.

The six-member committee unanimously voted to leave the benchmark policy rate unchanged at 5.25%. It also unanimously voted to retain the neutral stance.

Governor Sanjay Malhotra said the MPC was of the view that there were "considerable risks" to its baseline assessment of inflation and growth because of uncertainty surrounding the duration and intensity of the conflict in West Asia, the magnitude of its spillover effects and the pace of restoration of global supply chains.

The committee also noted uncertainty surrounding the food inflation outlook following forecasts of a subnormal southwest monsoon associated with El Niño conditions.

"Although risks of higher inflation have amplified, the MPC felt it would be prudent to wait for greater clarity to emerge," Malhotra said.

He said the committee would remain data-dependent and continue to closely monitor developments, including the risk of supply-side pressures becoming embedded in the general price level and inflation expectations.