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Informist, Tuesday, Aug. 4, 2026

 

MUMBAI – The following are economists' expectations from the Reserve Bank of India's Monetary Policy Committee meeting, which began Monday. The committee's decision will be announced Wednesday.

 

BANK OF BARODA

We expect the RBI to hold the policy repo rate unchanged at 5.25% and keep the stance as neutral. However, we believe that could be the right opportunity for the central bank to prepare markets for a future hike. The RBI will also leave growth and inflation forecasts unchanged. High-frequency indicators, along with corporate results, are pointing to India's GDP growth in Apr-Jun to around 6.8-7.0%. Actual GDP numbers will be available before the October policy, when we expect a revision.

 

MPC members will also remain watchful regarding inflation, given volatility in international oil prices and weak monsoon. A clear picture on sowing will also be available by September. We estimate upside risks to inflation to prevail, even if international oil prices come down, in the form of higher insurance costs for shipping through the Strait of Hormuz and Red Sea, and domestic food prices. Therefore, we are pricing in at least one rate hike in Oct-Mar.

 

BARCLAYS

The indicator of financial conditions, which fell below zero in early July, is now back to levels seen at the time of the last MPC meeting. With re-escalation in West Asia and the intensifying El Nio causing uncertainty, we expect the RBI to continue with its neutral pause on Aug. 5.

 

Not much has changed in the external backdrop since the previous RBI policy meeting on Jun. 5. Having persisted with a pause calendar-year-to-date, we think the MPC will continue with its 'neutral pause' on Aug. 5 as well. Since the Jun. 5 meeting, we have seen the ceasefire go into effect, be violated and be withdrawn; the Strait of Hormuz opened, then closed, became free, and then chargeable again; and Brent crude swung between $71.5 per barrel and $100 per barrel. We think the best thing to do amid this volatility is nothing. 

 

DBS GROUP RESEARCH

The Reserve Bank of India Monetary Policy Committee is expected to keep the benchmark rate unchanged at 5.25% on Aug. 5. We anticipate a cautious policy statement that underscores the need for continued vigilance on the inflation outlook, while placing greater emphasis on core inflation as a more reliable measure of underlying price pressures than headline inflation, which has been influenced by both domestic and global supply-side factors.

 

Against this backdrop, the committee is likely to push back against market expectations of a more aggressive tightening path reflected in implied rates. That said, the MPC is increasingly confronted by signs of a build-up in inflationary risks. Brent crude prices have risen amid renewed geopolitical tensions. Below-normal rainfall presents upside risks to food inflation, and the development of El Nio conditions could lead to higher imported agricultural commodity prices. Therefore, a more hawkish bias in policy guidance may become increasingly difficult to avoid as the real policy rate cushion narrows, inflation risks remain skewed to the upside, and the probability of GDP growth exceeding 7% in Apr-Jun increases.

 

GAURA SEN GUPTA, CHIEF ECONOMIST, IDFC FIRST BANK

The August policy will take place against the continued uncertainty on the West Asia crisis and monsoon outlook. However, compared to the June policy, the level of uncertainty is lower on both growth and inflation. First, the economy has proved far more resilient to the crude oil price shock, with growth conditions remaining strong in Apr-Jun. Fears of potential supply shortages have not materialised, with India diversifying its sources of petroleum imports. Second, the rise in CPI inflation has been more moderate, with Apr-Jun at 3.9% year-on-year versus the RBI's estimate of 4.2%.

 

Third, the brief period of ceasefire between the US and Iran in June has shown that if there is a credible peace agreement, the correction in crude oil prices will be swift and sharp. This contrasts with earlier expectations that the reduction in crude oil prices would take time even if there is a peace agreement. Against this background, conditions remain conducive to remaining on pause as the balance of risk to growth and inflation turns less adverse. Neutral stance remains appropriate, allowing the RBI policy flexibility to deal with the rapidly evolving external environment.

 

GOLDMAN SACHS

We expect the RBI MPC to remain on hold at the August meeting and retain its 'neutral' stance. In our view, the RBI is likely to revise its inflation forecast modestly lower, reflecting crude oil prices that are now below the $95 per barrel assumption prevailing in the June meeting. We expect them to keep growth projections unchanged to slightly higher, reflecting firmer incoming activity data. That said, we expect the MPC to retain a cautious tone on the outlook, particularly around El Nio-related weather risks and the still-elevated uncertainty from West Asia geopolitical tensions.

 

While oil prices have moderated from their early-June highs, around $95 per barrel during the June policy meeting, they remain volatile. In addition, the Fed kept rates unchanged at its July meeting, which markets interpreted as relatively dovish, and our US economics team continues to expect the Fed to remain on hold through 2026, helping ease external balance pressures at the margin. With the INR having broadly stabilised following the RBI's recent FX measures, we see limited need for the MPC to turn more hawkish in the near term. We continue to expect a cumulative 50 basis points of rate hikes in the cycle, with 25 bps of rate hikes in the October and December policy meetings, with risks that the hiking cycle is pushed out if inflation remains more benign than our expectations.

 

ICICI BANK

Growth is getting far more broad-based, as seen in rising demand for entry-level two-wheelers and four-wheelers, even as there is a possible impact of El Nio on rural demand and food prices. Food inflation is estimated to increase this year due to a low base last year and a below-normal monsoon, when energy prices are higher than last year. Given the current trends, growth is likely to be above the RBI's projection of 6.6% while inflation is trending lower than the RBI's projection of 5.1% for FY27. While the August policy is expected to see a status quo, given global uncertainty on policy rates and energy prices, the RBI's projections on inflation and any tweak in language would decide the trajectory of policy rates in Oct-Mar. Oil prices would be crucial in determining the trajectory of interest rates.

 

MANDAR PITALE, HEAD, FINANCIAL MARKETS, SBM BANK (INDIA)

Present growth-inflation dynamics are pointing towards risks to growth with a manageable inflation trajectory in the immediate future. This, coupled with elevated global uncertainties, may result in the MPC not considering the "rate hike" option in a hurry during the forthcoming MPC meeting in August.

 

MPC is expected to deliver cautionary guidance with global oil prices and monsoon remaining key monitorables for future policy actions. Oil prices moving up in $90 to $100 range per barrel for foreseeable future due to sustained tension will once again bring forward a strong case for generalised increase in price pressures ultimately percolating to demand side. This will create a strong skewness towards rate hikes in the second half of 2026-27 (Apr-Mar).

 

MADHAVI ARORA, CHIEF ECONOMIST, EMKAY GLOBAL FINANCIAL SERVICES

We expect the MPC to keep its rates and neutral stance unchanged this week, while reiterating a data-driven wait-and-watch approach. The policy tone is likely to be cautious albeit constructive, balancing uncertainties from the West Asia conflict, tighter global financial conditions, and El Nio risks as against resilient domestic growth and robust FCNR+ inflows.

 

We do not expect any meaningful changes to the RBI's growth or inflation forecasts. Instead, the focus is likely to be on the impact of FCNR+ inflows on external accounts, the INR, and liquidity management. We reckon that the RBI has offset a large part of the FCNR-driven liquidity injection by taking delivery of its forward positions, although core liquidity remains elevated at about INR 5.4 trillion due to high government cash balances. We expect core liquidity to peak in Jul-Sept before normalising in Oct-Mar, as the FCNR+ window closes and currency leakage picks up. Accordingly, the RBI is more likely to rely on temporary liquidity absorption measures rather than tighten its policy stance.

 

NIRMAL BANG INSTITUTIONAL EQUITIES

We expect the MPC to remain on hold at its August meeting. CPI inflation in Apr-Jun stood at 3.9%, below the RBI estimate of 4.2%. We see some downside risk to the RBI's CPI estimate of 5.1%, although the apex bank may wait until the next meeting to revise down its forecasts. Meanwhile, high-frequency indicators suggest resilient growth may eventually prompt an upward revision in the RBI's growth estimate for FY27, currently at 6.6%.

 

We expect the RBI to remain on an extended pause through FY27 and look through any supply shock-driven inflation unless inflation expectations become entrenched. A pick-up in FPI flows into equity and debt and robust FCNR (B) flows are likely to lend support to the INR. We expect the RBI to conduct FX purchases shoring up FX reserves, which will also help offset the liquidity tightness that may evolve in Oct-Mar FY27. Increased FX intervention may, however, reduce the requirement of open market operation purchases by the RBI, which may limit the scope for a further rally in bond yields.

 

YES BANK

Since the previous meeting, several developments have complicated the policy landscape. While for Apr-Jun, average inflation has undershot the RBI's own expected levels, inflation is expected to rise through the remainder of FY27. A confluence of risks is making it difficult for a clear view to emerge – volatility in global commodity prices, vacillating West Asia status, rising WPI and a wide wedge between WPI and CPI, $41 billion inflows through the swap route cooling off pressures on INR, central banks turning hawkish across regions, etc.

 

We see the MPC less worried about the West Asia impact on growth, given resilient advance indicator trends, while keeping a close watch on the hit to agricultural output out of deficient rainfall. Worries may be expressed in inflation dynamics, as newspaper reports indicate manufacturers are readying to pass on higher input costs to end users. With a multitude of evolving factors, it remains prudent for the RBI to provide a status quo policy in August, allowing it time to more closely assess the shifting balance between inflation risks and growth momentum. End

 

US$1 = INR 95.38

 

Compiled by Pratiksha

Edited by Saji George Titus

 

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