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Informist, Wednesday, Aug. 5, 2026

 

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--RBI Malhotra: MPC decided to maintain 'neutral' policy stance 
--RBI Malhotra: MSF, Bank rates remain unchanged at 5.50%; SDF rate at 5.00% 
--RBI Malhotra: MPC left repo rate unchanged at 5.25% 
--RBI Malhotra: MPC unanimously left repo rate unchanged at 5.25%
--Minutes of MPC Aug meet to be published on Aug 19

 

NEW DELHI – The Reserve Bank of India's Monetary Policy Committee Wednesday left the policy repo rate unchanged at 5.25% in a unanimous decision even as headline inflation is expected to rise near term, as West Asia war continues to amplify market volatility, said Governor Sanjay Malhotra. He said growth was resilient and supported by strong demand, but it may be lower in 2026-27 (Apr-Mar).

 

"The MPC noted, that headline inflation has edged up above target, as expected, the realised inflation, however, remained marginally lower than projections, reflecting limited pass-through of cost pressures," Malhotra said. The higher inflation is mostly on account of fuel and food, with little signs of generalisation of price pressures so far, he said.  

 

"After the detailed assessment of the evolving macroeconomic and financial developments, as well as the output, the MPC decided unanimously to keep the policy repo rate unchanged at 5.25%. Consequently, the Standing Deposit Facility rate shall remain unchanged at 5% and the Marginal Standing Facility rate and the bank rate at 5.5%," Malhotra said. The MPC also decided to retain the neutral stance to respond appropriately to macroeconomic developments.

 

The rate-setting panel's decision was on expected lines. All economists and market participants polled by Informist expected the committee to maintain the repo rate due to the uncertainty over the impact of the war in West Asia and the El Nino condition on economic activity and inflation. The panel had lowered the repo rate by a cumulative 125 basis points in 2025, the most in a calendar year since 2019. It had last raised interest rates in February 2023.

 

Malhotra said Indian economy has remained resilient amid persisting global headwinds as indicated by high frequency data available so far. "Looking ahead, the turbulent global economic environment is likely to have some bearing on domestic economic activity. Energy prices and supply chain pressures remain elevated and uncertain. The adverse impact is being contained with various supply side measures," he said. 

 

El Nino conditions pose some risks to agriculture sector's outlook and rural demand, he added. The RBI, however, raised FY27 real GDP growth projection to 6.7%, from 6.6?rlier.

 

The monetary policy statement noted that while CPI inflation increased to 4.4% in June, after remaining below the target for 16 consecutive months, it turned out to be lower by 30 basis points than what was earlier projected for Apr-Jun. At 4.4% for June, CPI inflation averaged 3.9% for the June quarter, lower than the RBI's projection of 4.2%. 

 

"Going forward, El Nino's impact on temporal and spatial rainfall distribution continues to remain a risk...although generalised inflation pressures continue to remain modest so far, the risks of higher food, fuel and other input prices translating into a broad-based increase in inflation persist," it said.

 

Malhotra said, "Global oil prices have remained volatile with sharp two-way movements triggered by geopolitical developments, blurring the near-term outlook." On back of these factors, the MPC lowered its CPI inflation forecast to 5.0% from 5.1% for FY27.

 

The minutes of the MPC's August meeting will be published on Aug. 19. The next meeting of the MPC is scheduled for Oct. 5-7.  End

 

Reported by Aaryan Khanna, Pratiksha and Sagar Sen

Edited by Akul Nishant Akhoury

 

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