When in doubt.

"The RBI's six-member Monetary Policy Committee (MPC) voted unanimously to keep the benchmark repo rate at 5.25%...The policy stand was retained at neutral." HT. "The repo rate is the interest rate at which the Reserve Bank of India (RBI) lends short term funds to commercial banks against government securities... with an agreement to repurchase them later at a slightly higher price. The difference in price reflects the repo rate." Monefy. Banks decide their lending rates based on the repo rate, so a high repo rate reduces borrowing by increasing costs for borrowers and slows the economy, a low rate is expected to encourage economic growth by increasing investment due to lower borrowing costs. The MPC projected real GDP growth at 7.6% in FY 2025-26 and at 6.9% in FY 2026-27. News18. "For the new fiscal year (1 Apr 2026-3 Mar 2027), CPI inflation is projected at 4.6%, with quarterly estimates of 4% in Q1, 4.4% in Q2, 5.2% in Q3 and easing to 4.7% in Q4. Core inflation is projected at 4.4%." ET. In March 2026, "India's federal government ...retained its retail inflation target of 4% with a comfort band of 2%-6%, according to an official notification. The target will remain in place for five years." Reuters. "Zerodha founder and CEO Nithin Kamath has said foreign investor interest in India has 'pretty much died out'," because "India is being seen as geopolitically exposed, especially to an oil shock, while the lack of strong AI-linked plays and weak rupee are also weighing on the sentiment." NDTV.  The RBI listed five dangers to the Indian economy: 1. "elevated crude oil prices could increase imported inflation and widen current account deficit"; 2. higher commodity prices may affect agriculture, industry and services and lower domestic output; 3. risk aversion by foreign funds may tighten liquidity and raise borrowing costs; 4. weaker global growth could reduce exports and inward remittances and 5. increased borrowing costs globally could raise costs in India. ET. Higher inflation should prompt a higher repo rate while falling output and lower GDP growth demands easing borrowing costs. This uncertainty regarding the effects of the Iran war on the global economy (ET) is the reason for the MPC voting for status quo. Just a few weeks ago, "A rare Goldilocks mix - robust growth, contained inflation, a low current account deficit and ample foreign exchange reserves - has set the economy apart from most peers." But now, "Rupee has depreciated by over 4% - underperforming most EM Asian peers, and foreign portfolio outflows have approached $12 billion in March alone," wrote Sakshi Gupta. As the Indian rupee crashed to 95 to the US dollar (in.investing.com), on 03 April, "The RBI announced new rules capping the open positions banks can hold in the onshore currency market at the end of each trading day (ET)."  "Traders rightly sensed RBI's mandate to cap local banks' end-of-day currency positions at $100 million as a desperate measure." "The market is no longer confident that the RBI will be able to stop the rupee from slipping past 100. After all, when a monetary authority restricts how lenders manage their books, it unwittingly ends up signaling that traditional tools like interest-rate hikes or dollar sales are no longer sufficient. That's when speculators swoop in," wrote Andy Mukherjee. "When in doubt, don't," said Benjamin Franklin (azquotes.com). That's what the RBI did. It didn't.