The RBI’s Monetary Policy Committee (MPC) unanimously kept the policy repo rate unchanged at 5.25%. Meanwhile, it retained the policy stance at neutral, preserving flexibility amid an evolving macroeconomic environment. The decision reflects benign underlying inflation pressures and a resilient growth outlook, supported by domestic demand and potential tailwinds from trade agreements. The RBI marginally revised up its H1 FY27 inflation and growth projections, while deferring full-year FY27 projections to the April meeting pending the release of the new CPI and GDP series. The RBI reiterated its focus on strengthening policy transmission and proactively managing liquidity, even as no new liquidity measures were announced. It also unveiled a set of measures to enhance customer protection, improve MSME credit flows, support real estate financing, improve ease of doing business for NBFCs, and deepen financial markets. The Governor signalled a “lower for longer” bias on policy rates, and in our view, an extended pause remains likely unless macroeconomic conditions weaken materially.
