Repo Rate Unchanged, Lower Inflation Forecast; Why Bankers Are Praising RBI’s 'Balanced' Policy Move

Bankers noted that the Reserve Bank of India’s decision to maintain the repo rate at 5.25 per cent will maintain policy consistency and foster credit expansion despite global uncertainties, especially given the concurrent upward revision of growth forecasts and lowered inflation expectations.

Financial leaders also expressed approval for the central bank’s new regulatory plans, such as revising loan interest rate structures to boost transparency and monetary transmission, along with the move to reopen on-tap licensing for urban cooperative banks.

What Did Bankers Say? 

State Bank of India Chairman CS Setty, who also chairs the Indian Banks Association (IBA), said the RBI''s decision to keep rates unchanged while revising the growth outlook upwards and inflation forecast downwards reflected a balanced and pragmatic approach that preserves macroeconomic stability.

He said the proposed review of the interest rate framework would enhance transparency in loan pricing, while measures relating to urban cooperative banks and rural cooperatives would strengthen financial inclusion and improve last-mile credit delivery.

Indian Overseas Bank Managing Director and CEO Ajay Kumar Srivastava said the status quo on rates and the continuation of the neutral stance reflected the RBI''s confidence in the resilience of the domestic economy despite geopolitical tensions and evolving global trade conditions.

He said stable policy rates would provide predictability in borrowing costs and support credit flow to productive sectors, including MSMEs, while the proposed harmonisation of lending rates across regulated entities would improve transparency.

Indian Bank managing director and CEO Binod Kumar said the upward revision in the GDP growth forecast to 6.7 per cent for FY27 from 6.6 per cent indicated the resilience of the Indian economy.

On Wednesday, the central bank kept its benchmark policy rate unchanged for a fourth consecutive meeting, opting to wait for greater clarity on whether higher energy costs triggered by the Iran war feed into broader inflationary pressures.

The six-member Monetary Policy Committee, headed by Governor Sanjay Malhotra, unanimously voted to keep the policy repo rate unchanged at 5.25 per cent and retained its "neutral" policy stance.

Further, Brajesh Kumar, Managing Director and CEO of Canara Bank, said surplus liquidity, supported by FCNR (B) inflows, could aid credit growth and keep bond yields stable.

Suryoday Small Finance Bank Managing Director and CEO R Baskar Babu said policy stability would help lenders better manage funding costs and support lending to retail, microfinance and MSME borrowers.

"Proactive liquidity management and policy measures to enhance transparency and consumer protection bode well for long-term growth in the retail lending sector," said Sudipta Roy, managing director and CEO of L&T Finance.  

RBI Keeps Repo Rate Unchanged

The RBI now projects 2026-27 consumer price inflation at 5% (down from 5.1%) and core inflation at 4.3% (down from 4.7%). Additionally, the FY27 GDP growth forecast was raised to 6.7% from 6.6%, with the central bank citing resilient domestic demand, manufacturing, and exports despite global uncertainties.