MPC Holds Repo Rate Unchanged Amid Global Uncertainty

By /

Context:

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 5.25%.

Background:

  • The repo rate is the interest rate at which RBI lends short-term funds to commercial banks. It is the primary monetary policy tool used to control liquidity, inflation, and growth.
  • A higher repo rate reduces borrowing and inflation, while a lower repo rate stimulates growth.
  • The MPC is a 6-member statutory body responsible for setting interest rates. It is chaired by the RBI Governor and consists of 3 RBI officials (including the Governor) and 3 members appointed by the Central Government for a 4-year term.
  • It aims to maintain price stability while supporting economic growth. It follows an inflation targeting framework of 4% ± 2%.

Why did MPC keep the Repo Rate Unchanged?

  • The MPC observed high inflation risks due to rising crude oil prices linked to the West Asia conflict.
  • It also noted growth concerns, as global uncertainty may reduce investment and output.
  • Supply disruptions, especially in energy and commodities, may worsen inflation.
  • At the same time, raising rates could further slow economic growth.
  • Therefore, the MPC adopted a “wait and watch” approach, balancing inflation and growth risks.

Conclusion

  • The decision reflects a careful balancing of inflationary pressures and growth slowdown, driven by global uncertainties.

La Excellence IAS Academy, the best IAS coaching in Hyderabad, known for delivering quality content and conceptual clarity for UPSC 2026 preparation.

FOLLOW US ON:

◉ YouTube : https://www.youtube.com/@CivilsPrepTeam

◉ Facebook: https://www.facebook.com/LaExcellenceIAS

◉ Instagram: https://www.instagram.com/laexcellenceiasacademy/

GET IN TOUCH:

Contact us at info@laex.in, https://laex.in/contact-us/

or Call us @ +91 9052 29 2929, +91 9052 99 2929, +91 9154 24 2140

OUR BRANCHES:
Head Office: H No: 1-10-225A, Beside AEVA Fertility Center, Ashok Nagar Extension, VV Giri Nagar, Ashok Nagar, Hyderabad, 500020

Madhapur: Flat no: 301, survey no 58-60, Guttala begumpet Madhapur metro pillar: 1524,  Rangareddy Hyderabad, Telangana 500081

Bangalore: Plot No: 99, 2nd floor, 80 Feet Road, Beside Poorvika Mobiles, Chandra Layout, Attiguppe, Near Vijaya Nagara, Bengaluru, 560040

Scroll to Top