The Reserve Bank of India (RBI) has maintained the status quo on the repo rate for the fourth consecutive policy meeting, keeping the benchmark rate unchanged at 5.25%. The central bank has also continued with its neutral policy stance, indicating that it remains cautious about inflation risks while closely monitoring economic growth.
According to Lata Pillai, Senior Managing Director and Head – Capital Markets, India, JLL, the RBI’s decision reflects a balanced approach amid a changing global economic environment. While inflation pressures remain a concern due to rising energy prices and geopolitical uncertainties, India’s strong domestic demand and stable macroeconomic indicators provide support to the economy.
The RBI’s decision comes at a time when inflation has increased but has not become widespread across sectors. This has given the central bank some flexibility to maintain stability while observing future developments. However, higher energy costs, uncertainty around global supply chains and possible challenges from the monsoon season continue to remain key factors influencing the economic outlook.
India’s economic growth indicators continue to show resilience. The country’s manufacturing and services sectors have maintained momentum, supported by strong domestic activity. The first quarter GDP growth for FY27 stood at 7%, highlighting the strength of the Indian economy despite global challenges.
The RBI has revised its full-year GDP growth projection upwards compared to its previous monetary policy assessment, with FY27 growth now estimated at 6.7%. At the same time, the inflation outlook has been revised slightly downward by 10 basis points to 5%. However, the impact of volatile crude oil prices and food inflation is expected to remain visible in the coming quarters.
A strengthening rupee has provided some relief by reducing external pressure, while liquidity conditions in the financial system continue to remain comfortable. The RBI is expected to maintain a flexible approach and take necessary steps if inflationary pressures increase later in the year.
Impact on real estate sector
For the real estate sector, particularly residential housing, the RBI’s decision to keep interest rates unchanged brings stability for developers and homebuyers. According to JLL, residential sales in the first half of 2026 have shown improvement on both sequential and year-on-year terms, and stable lending rates are expected to support market confidence.
With borrowing costs remaining predictable, homebuyers are likely to continue making purchase decisions, while developers can plan projects with greater certainty. However, rising construction costs remain a challenge. Developers may pass on these increased expenses to buyers, which could affect housing affordability, especially in the mid-income segment.
The shrinking share of affordable housing and increasing price pressure on budget-conscious buyers continue to be concerns for the industry. Despite these challenges, favourable lending conditions and improving economic stability are expected to support the overall residential market in the coming months.
The RBI’s decision highlights the central bank’s attempt to maintain a balance between controlling inflation and supporting economic growth. As global uncertainties continue, future policy decisions will depend on inflation trends, energy prices, monsoon performance and broader economic developments.
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