The central bank's six-member Monetary Policy Committee, headed by Governor Sanjay Malhotra, is expected to leave the repurchase rate unchanged at 5.25%
Inflationary pressures resurfaced after averaging a modest 2 per cent in 2025-26
The three-day meeting of the Reserve Bank of India's rate-setting panel started on Monday amid expectations of a status quo on the benchmark repo rate, with the Monetary Policy Committee slated to announce its decision on August 5. As global uncertainties and inflation risks persist, most experts expect the six-member Monetary Policy Committee (MPC) to adopt a cautious approach despite resilient domestic economic growth. In June, the Reserve Bank had kept its key policy rate unchanged at 5.25 per cent and adopted a cautious wait-and-watch stance as policymakers assessed the fallout of the West Asia conflict. The central bank had raised the retail inflation estimate for 2026-27 to 5.1 per cent from its earlier estimate of 4.6 per cent, largely due to mounting input costs, triggered by the pass-through of higher global energy prices to retail rates of petrol and diesel. It lowered its GDP forecast for FY27 to 6.6 per cent from the 6.9 per cent estimated in April. RBI Governor Sanjay
India's policy calendar this week will be led by the RBI's policy decision, PMI readings and forex reserves data
The trade reflects a global trend, with the US yield curve sharply steepening after the Federal Reserve held interest rates steady last week
Most economists expect stance to remain 'neutral'
The rate-setting body is likely to remain in wait-and-watch mode as uncertainties continue to cloud the macroeconomic outlook
Keeping in mind the factors on crop prospects, it stands to reason that rate cuts are out, and an unchanged position can be expected.
The growth-inflation outlook remains clouded despite easing West Asia tensions, with risks from food prices and supply chains, says Bhattacharya
RBI Monetary Policy Committee members highlighted risks of inflation becoming broad-based and stressed uncertainty around growth and prices due to the West Asia conflict
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RBI has kept the repo rate unchanged at 5.25%, extending its pause on rate changes. What does this mean for your home loan EMI, borrowing costs, and monthly budget? Here's a quick breakdown of the MPC
While immediate forex inflows are not anticipated from the above measures, they are likely to arrest the recent capital outflows and foster improved market sentiment
A hike in the base rate, along with the tax concessions, would have been a workable proposition given the need to shore up the forex inflows, said Joseph Thomas, head of research, Emkay Wealth
In the bond market, the pause combined with a cautious undertone suggests that yields are likely to remain range-bound in the near term, albeit with a discernible upward bias as inflation risks build.
The MPC's approach is data-dependent and cautiously hawkish: it acknowledges weaker growth, flags higher inflationary risks, and keeps policy unchanged for now to watch how the trade-off evolves.
Sarvjit Singh Samra of Capital Small Finance Bank said that RBI MPC has appropriately refrained from deploying interest rates as a tool to counter the recent weakness in the rupee.