RBI Keeps Repo Rate Unchanged at 5.25%; Maintains Neutral Policy Stance

The Reserve Bank of India (RBI) has kept the policy repo rate unchanged at 5.25%, with the Monetary Policy Committee (MPC) unanimously voting to maintain a neutral policy stance at its meeting held on August 5, 2026.

The decision reflects the central bank's balanced approach as it seeks to support economic growth while keeping inflation under control amid global uncertainty and fluctuating food and fuel prices.

RBI MPC Decision on Other Policy Rates

Along with the repo rate, the RBI also left other key policy rates unchanged:

• Standing Deposit Facility (SDF) Rate: 5.00%
• Marginal Standing Facility (MSF) Rate: 5.50%
• Bank Rate: 5.50%

The meeting was chaired by RBI Governor Sanjay Malhotra, along with MPC members Dr. Nagesh Kumar, Saugata Bhattacharya, Prof. Ram Singh, Dr. Poonam Gupta and Indranil Bhattacharyya.

RBI Expects India's Growth to Remain Strong

Despite ongoing global challenges, the RBI said the Indian economy continues to show resilience. Strong domestic demand, healthy private consumption, higher government capital expenditure and steady bank credit growth have supported economic activity during the first quarter of FY27.

The central bank has projected India's real GDP growth at 6.7% for FY2026-27. The quarterly growth estimates are:

• Q1 FY27: 7.0%
• Q2 FY27: 6.4%
• Q3 FY27: 6.5%
• Q4 FY27: 6.8%
• Q1 FY28: 7.3% (early projection)

The RBI noted that government infrastructure spending, improving capacity utilisation and opportunities arising from new trade agreements are expected to support growth. However, uneven monsoon conditions, possible El Niño-related weather disruptions and global supply chain uncertainties remain key risks.

Inflation Remains a Key Focus

Retail inflation, measured by the Consumer Price Index (CPI), rose to 4.4% in June 2026 after staying below the RBI's target level for the previous 16 months. According to the central bank, the increase was mainly driven by higher food prices in some regions and changes in retail fuel prices.

Core inflation, which excludes food and fuel, remained stable at 3.9%, suggesting that underlying price pressures continue to be moderate.

For FY2026-27, the RBI has projected average CPI inflation at 5.0%. Its quarterly projections are:

• Q2 FY27: 4.7%
• Q3 FY27: 5.9%
• Q4 FY27: 5.5%
• Q1 FY28: 5.3%

The RBI expects inflation to rise temporarily during the second half of the financial year due to seasonal food prices and global commodity movements before easing gradually.

Why Did the RBI Keep Rates Unchanged?

The central bank said global economic conditions remain uncertain, with geopolitical tensions, volatile financial markets and changing monetary policies across major economies continuing to pose risks.

Read more: RBI Releases MPC Meeting Calendar for FY27: What You Need to Know?

Conclusion

The RBI also said it will continue to closely monitor inflation, especially food prices and the progress of the monsoon, before considering any policy changes. The minutes of the August MPC meeting will be released on August 19, 2026, while the next RBI monetary policy meeting is scheduled for October 5-7, 2026.

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