RBI keeps repo rate at 5.25%, cuts FY27 GDP forecast to 6.9% on oil shock

The Reserve Bank of India's Monetary Policy Committee (MPC), in its first review of FY 2026-27 held from 6 to 8 April 2026, voted unanimously to keep the policy repo rate unchanged at 5.25% and to maintain a neutral stance. The Standing Deposit Facility (SDF) stays at 5.00% and the Marginal Standing Facility (MSF) and Bank Rate at 5.50%. The decision continued to weigh on markets through 24 April as oil prices climbed.

The MPC cited heightened global geopolitical risks — particularly the conflict in West Asia that has pushed Brent crude near 100 US dollars per barrel — as a supply-side shock that could lift inflation while denting growth. The committee judged that a rate cut would not address a supply shock and decided to wait and watch.

Crucially, the RBI revised projections sharply: FY27 real GDP growth was cut by 50 basis points to 6.9%, while CPI inflation forecast was raised to 4.6% for the year — more than double the 2.1% print that had prevailed through FY26. Indian equity markets felt the pinch; on 24 April the Sensex fell about 982 points (1.27%) to 76,681 and Nifty slipped below 24,000, dragged down by IT stocks and rising crude. The next MPC meeting is scheduled for 3-5 June 2026.

Exam angle: Memorise the rate corridor — SDF 5.00% (floor), Repo 5.25% (policy rate), MSF/Bank Rate 5.50% (ceiling). The MPC has 6 members (3 from RBI including the Governor as chair, 3 external members appointed by the Centre) and meets at least four times a year. The RBI's medium-term CPI inflation target is 4% with a +/- 2% band, set under Section 45ZA of the RBI Act, 1934. A 'neutral' stance gives the MPC flexibility to move rates either way; previous stances have been 'accommodative' and 'withdrawal of accommodation'.