The RBI's MPC has maintained the repo rate at 5.25% for FY27, a move experts call a cautious approach to global uncertainties and domestic growth. The decision is expected to provide stability to industry and support resilient domestic demand.
Industry experts have suggested that the Reserve Bank of India's Monetary Policy Committee (MPC) choosing to maintain the status quo on policy rates reflects a cautious approach to navigating global uncertainties and domestic growth targets.
The Reserve Bank of India kept the policy repo rate unchanged at 5.25 per cent in the first monetary policy announcement of the financial year 2026-27, citing rising global uncertainties and geopolitical tensions.
Expert Analysis on Economic Outlook
Sujan Hajra, Chief Economist and Executive Director at Anand Rathi Group, noted, "The decision was largely in line with expectations. From here, the RBI is likely to continue with a data-dependent approach, suggesting an extended pause in rates. The broader policy stance is also likely to remain neutral, although liquidity conditions may continue to be managed in an accommodative manner."
"With domestic demand growth remaining resilient and inflation largely within the target range of 2% to 6%, this position provides stability to industry while addressing emerging risks," said Rajeev Juneja, President, PHDCCI. Improving export competitiveness remains critical in the context of ongoing global trade disruptions and rising logistics costs. Overall, PHDCCI remains optimistic about India's medium-term economic prospects, supported by ongoing structural reforms, he added.
"This policy reflects a careful assessment of the evolving domestic and external macroeconomic background. While domestic growth drivers viz. consumption and investment remain healthy, rising global energy prices warrant continued vigilance," said Ranjeet Mehta, SG and CEO, PHDCCI.
Garima Kapoor, Deputy Head of Research and Economist at Elara Capital, flagged concerns regarding the impact of energy supply chain disruptions on future growth estimates. Kapoor said, "We do not see MPC hiking policy rates until CPI inflation durably surpasses 6% and inflation expectations get unhinged. We believe the 6.9% growth estimate put out by RBI for FY27 may need a reassessment as full pre-war energy export volumes might take 3-6 months due to backlog, diverted tankers, and partial infrastructure damage," said
Real Estate Sector Welcomes Stability
The real estate sector welcomed the pause, noting that stable borrowing costs are essential for maintaining buyer sentiment and project feasibility. Industry leaders stated that the move provides the predictability required for long-term investments in both residential and commercial segments.
Anshuman Magazine, Chairman and CEO - India, South-East Asia, Middle East and Africa, CBRE noted, "For the real estate sector, this sustained period of stable borrowing costs is highly encouraging. A steady repo rate continues to anchor homebuyer sentiment by keeping EMIs predictable and manageable. Concurrently, the effective moderation of inflation by the year-end is likely to spur further business expansion, boost consumer purchasing power, and drive sustained, robust demand across both the residential and commercial real estate segments."
Noting along the same lines, Shishir Baijal, International Partner and Chairman and Managing Director at Knight Frank India, said that the absence of rate volatility acts as a reassuring factor for the market. "For the real estate sector, this continuity in interest rates plays a crucial role in sustaining momentum. Stable borrowing costs help preserve affordability for homebuyers while also enabling developers to plan with greater confidence. In an environment where sentiment can be easily influenced by macroeconomic signals, the absence of rate volatility acts as a reassuring factor for the market," Baijal said.
Industry leaders observed that while cost pressures remain a factor, the current policy environment supports a steady growth trajectory for the infrastructure and construction industries. "For the real estate and construction sector, such stability in borrowing costs is critical for maintaining project viability and ensuring steady demand. A stable rate environment, combined with continued policy clarity, will be key to navigating cost pressures while keeping the sector's growth trajectory intact," said Kirthi Chilukuri, Founder and Managing Director of Stonecraft Group.
Sidharth Chowdhry, Managing Director of Dalcore, hailed the decision, stating, "At Dalcore, we believe that stable interest rates enable homebuyers to make informed decisions while allowing developers to plan project pipelines with greater certainty. This measured approach by the RBI will help preserve demand momentum, particularly in the residential segment, and continue to support the overall resilience of the real estate ecosystem." (ANI)
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