RBI MPC Holds Repo Rate at 5.25% — First Policy Decision of FY 2026-27
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.
Monetary Policy & Inflation
This sub-topic has appeared in 6 UPSC Prelims questions.
The RBI's Monetary Policy Committee held the repo rate at 5.25% in April 2026, maintaining a neutral policy stance.
●This was the second consecutive hold after the February 2026 meeting, following a cycle of four cumulative cuts totalling 125 basis points since February 2025 (when the rate stood at 6.5%). The six-member MPC is chaired by the RBI Governor and includes three RBI officials and three external members appointed by the Central Government.
●The rate corridor: the Standing Deposit Facility (SDF) acts as the floor and the Marginal Standing Facility (MSF) as the ceiling.
●The April hold was driven by West Asia conflict pressures on crude prices, a depreciating rupee, and residual global trade uncertainty from US tariff measures.
●India's CPI remained below the 4% target at the time of the decision.
The MPC is constituted under Section 45ZB of the RBI Act, 1934 (amended 2016) — the statutory basis for its composition, voting procedure, and inflation targeting mandate of 4% ± 2%.
Factual Pointers
Practice · 2 questions
Consider the following statements about the RBI's Monetary Policy Committee (MPC):
1. The MPC is constituted under Section 45ZB of the RBI Act, 1934.
2. The MPC consists of six members, of whom four are external members appointed by the Central Government.
3. If the MPC fails to meet its inflation target for three consecutive quarters, it must submit a written explanation to the Central Government.
Which of the statements given above is/are correct?
Consider the following statements about RBI's policy rate corridor:
1. The Standing Deposit Facility (SDF) rate acts as the floor of the policy rate corridor.
2. The Marginal Standing Facility (MSF) rate acts as the ceiling of the policy rate corridor.
3. The Reverse Repo Rate was replaced by the SDF as the operative floor in April 2022.
Which of the statements given above is/are correct?
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