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Informist, Wednesday, Aug. 5, 2026

 

MUMBAI - Anitha Rangan, chief economist, RBL Bank Ltd., said the following on the Reserve Bank of India's third bi-monthly monetary policy statement for 2026-27 (Apr-Mar) detailed Wednesday:

 

The Reserve Bank of India keeps policy rate unchanged as expected at 5.25% in a unanimous decision and also keeping stance at "neutral". On the view that despite expected increase in headline inflation it is not expected to get broad based into core as it is driven by food and fuel, RBI kept policy rates unchanged. Governor (Sanjay Malhotra) quoted that they need greater clarity on inflation effects to recalibrate rates. Alongside inflation expectation was revised downward by 10 bp (basis points) to 5% for 2026-27 (Apr-Mar) while growth was revised upwards by 10 bp to 6.75(%) for FY27. Acknowledging that external shocks do pose upside risks to CAD (current account deficit), the policy statement noted that trade deals, services resilience, remittances mitigate the risks. Capital flow measures will drive a BoP (balance of payment) surplus. No specific measures on liquidity were announced with a commitment to manage liquidity proactively. However, (Malhotra) noted that further rate transmission has moderated with both deposit and lending rates hardening since June.

 

Overall, the policy statement continues to suggest that RBI is willing to wait and watch and will adopt a more reactive approach with respect to policy rates and increasingly rely on non-monetary tools (for liquidity and flows) to steer the economy. With the stance at neutral, we would think that unless geopolitical pressures go for the adverse over the next two months, RBI will remain more proactive on liquidity measures in October rather on rates. The comfort on core inflation (suggests) that RBI is awaiting evidence (to see) sustained impact of second-order effects on inflation to act on rates.  End

 

Compiled by Nandini Sinha

Filed by Deepshikha Bhardwaj

 

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