RBI MPC Holds Repo Rate at 5.25% — First Policy Decision of FY 2026-27
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Article summary
The Reserve Bank of India's Monetary Policy Committee (MPC), chaired by Governor Sanjay Malhotra, held the benchmark repo rate unchanged at 5.25% in its April 2026 meeting — the first policy decision of FY 2026-27 — maintaining a neutral stance. The hold follows a cumulative 125 basis point reduction since February 2025. Analysts cited the West Asia conflict's upward pressure on commodity prices and India's weakening rupee as the primary reasons for caution. The RBI signalled a 'wait-and-watch' approach, with the next meeting scheduled for June 2026.
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Sample questions — answers revealed after test
Q1. Under the Monetary Policy Committee (MPC) framework established by the RBI Act, 1934, which of the following correctly describes the statutory composition of the MPC?
Q2. Suppose India's CPI inflation rises to 6.8% in each of the three quarters following the April 2026 MPC meeting, breaching the upper tolerance limit of the inflation target. Which of the following correctly describes the MPC's mandatory obligation under the RBI Act in this scenario?
Q3. With reference to the RBI's monetary policy framework and the April 2026 MPC decision, consider the following statements: 1. The Standing Deposit Facility (SDF) rate serves as the floor of the RBI's liquidity adjustment corridor, while the Marginal Standing Facility (MSF) rate serves as the ceiling, with the repo rate positioned between the two. 2. The RBI's cumulative 125 basis point repo rate reduction between February 2025 and April 2026 necessarily implies a proportional reduction in banks' lending rates, as MCLR-linked loans reprice automatically with every repo rate change. 3. A 'neutral' monetary policy stance, as adopted by the MPC in its April 2026 meeting, means the committee is equally open to a rate cut or a rate hike in subsequent meetings, unlike an 'accommodative' stance which signals only cuts. 4. The MPC is required to meet at least four times in a financial year, and all decisions must be published along with the individual voting record of each member. Which of the statements given above are correct?