MUMBAI, June 5: The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) on Friday unanimously decided to keep the policy repo rate unchanged at 5.25 per cent and retained its neutral policy stance, citing global uncertainties, geopolitical tensions in West Asia and inflation-related concerns.
Announcing the decision, RBI Governor Sanjay Malhotra said the MPC, after assessing evolving macroeconomic and financial conditions, unanimously voted to leave the repo rate under the Liquidity Adjustment Facility (LAF) unchanged at 5.25 per cent.
Consequently, the Standing Deposit Facility (SDF) rate remains at 5 per cent, while the Marginal Standing Facility (MSF) rate and the Bank Rate continue at 5.5 per cent, he said.
The Governor attributed the decision to a challenging global environment marked by heightened uncertainty, disruptions to trade routes and supply chains, increased market volatility and cautious business sentiment.
He said the Indian economy entered the current phase of global turbulence with stronger fundamentals compared to previous similar episodes, but stressed the need to further strengthen economic resilience.
Malhotra also flagged the ongoing geopolitical impasse in West Asia, rising energy prices and global supply chain disruptions as major risks facing the world economy.
According to the RBI Governor, central banks across major economies are adopting a more cautious approach as they balance the need to support growth while containing inflation. He observed that some advanced economy central banks may increasingly lean towards monetary tightening.
While global equity markets remain buoyant on optimism surrounding artificial intelligence-driven growth, global bond markets continue to face pressure due to renewed inflation concerns and debt sustainability worries, he added.
The decision follows the MPC’s April policy meeting, where it had also unanimously retained the repo rate at 5.25 per cent and maintained a neutral policy stance. (Agencies)
