RBI MPC: Experts see low scope for hike; policy continuity positive for mkt

The RBI's Monetary Policy Committee kept the repo rate unchanged at 5.25 per cent and retained its neutral stance. Experts noted that the central bank struck a balanced tone

The Reserve Bank of India’s decision to keep the repo rate unchanged at 5.25 per cent and retain its neutral policy stance was largely in line with market expectations. Experts said the central bank struck a balanced tone by acknowledging persistent global uncertainties while expressing confidence in domestic growth and easing inflation. The modest upward revision to the FY27 GDP forecast and lower inflation projection suggest policymakers remain focused on supporting growth without signalling any immediate shift toward tighter monetary policy.

 

Experts' view on MPC outcome

 

Pranay Aggarwal, Director & CEO of Stoxkart 

 

For equities, the policy largely reinforces a range-bound but constructively selective outlook. The rate pause was widely anticipated and therefore brings no negative surprises for the markets. At the same time, steady economic growth and intact corporate demand drivers continue to support the broader earnings outlook. However, elevated inflation expectations for Q3 and persistent global volatility may limit sharp valuation re-ratings in the near term, keeping investor focus on sectors with strong margin visibility and lower input-cost sensitivity, including banking, domestic consumption, and infrastructure.

 

 

Vinit Bolinjkar, head of research, Ventura                                                                                                                                     

 

The MPC’s unanimous decision to keep the repo rate unchanged at 5.25 per cent while maintaining a neutral stance indicates a cautious and balanced approach amid evolving domestic and global uncertainties. The RBI has kept the SDF rate at 5 per cent and the MSF and Bank Rate at 5.5 per cent . While headline inflation has moved slightly higher due to food and fuel pressures, core inflation remains under control, providing comfort to the central bank to pause after delivering 125 bps of rate cuts during 2025. With economic growth remaining resilient, the RBI appears comfortable maintaining policy stability while closely monitoring global risks, including the West Asia conflict, trade disruptions and elevated crude prices. From an equity market perspective, policy continuity remains positive, particularly for rate-sensitive sectors such as banking, autos and real estate, while improving liquidity conditions and the upcoming festive season could support broader consumption and investment themes

 

Madhavi Arora, chief economist, Emkay Global Financial Services. 

 

The policy tone is cautious albeit constructive, balancing uncertainties from the ME conflict, tighter global financial conditions, and El Niño risks against resilient domestic growth and robust FCNR+ inflows. Despite 1Q inflation undershooting RBI's forecast, the MPC has retained its emphasis on El Niño risks, while reiterating that any near-term price pressures would largely be supply-driven unless they broaden into second-round inflation effects for monetary policy to act.

 

Aditi Nayar, chief economist, ICRA 

 

A status quo on the policy rate and stance by the MPC in the August 2026 meeting was a foregone conclusion, given the limited evidence of generalisation of inflationary pressures so far. Amidst considerable volatility engendered by geopolitics and the monsoon, the Committee’s growth and inflation forecast were tweaked marginally, and we believe that these are appropriate for an average crude oil price of $80-85/barrel and a moderate rainfall deficit. Importantly, the tone of the policy statement was relatively neutral and does not suggest that rate tightening is imminent.

 

Dr. V K Vijayakumar, chief investment strategist, Geojit Investments 

 

As widely expected, the MPC unanimously decided to hold the repo rate unchanged at 5.25 per cent and retain the neutral stance. The slight surprise element was the upward revision in GDP growth for FY27 to 6.7 per cent from 6.6 per cent earlier and the downward revision in CPI inflation for FY 27 to 5 per cent from 5.1 per cent earlier. Overall, the policy is optimistic about the emerging growth-inflation dynamics even amidst what the Governor called ‘persistent global uncertainty.’ 

 

According to the Governor, the rationale for holding the rates is the resilience of the Indian economy and benign core inflation.  The policy is positive for stock markets. Bond yields are stable.

 

Dnyanada Vaidya, research analyst, BFSI, Axis Direct.

 

The RBI’s decision to maintain the repo rate while keeping its neutral stance was largely anticipated as inflationary pressures eased slightly and growth remained resilient. While oil prices have corrected, monsoon-related challenges remain a key risk for inflation and are keenly eyed. 

 

From a banking perspective, banks fared well in a seasonally weak Q1 with credit growth remaining strong and earnings remaining resilient, supported by well-contained credit costs and modest opex growth despite margin headwinds visible across most banks. We expect margins to remain largely range-bound in the near-term and any improvement will be largely led by a favourable portfolio mix shift. We continue to favour banks with strong earnings growth visibility, healthy balance sheets and attractive valuations. 

 

Vijay Kuppa, CEO, InCred Money

 

The MPC’s decision to maintain a status quo on the benchmark lending rate is in line with our expectations. The central bank continues to prioritise long-term stability while maintaining flexibility to act if needed.

 

Better-than-expected growth and lower-than-estimated inflation could likely mean a continuation of the status quo. For investors, the stability in monetary policy is constructive. The commentary on inflation, growth and liquidity bodes well for financial markets, and we could see bond yields and the rupee remaining range-bound, subject to global conditions.