The Reserve Bank of India’s Monetary Policy Committee (MPC) held the repo rate at 5.25 per cent for a fourth consecutive bi-monthly review, following its meeting held from 3 to 5 August under Governor Sanjay Malhotra. The decision was unanimous, and the MPC retained its “neutral” policy stance.
Why the Committee Held Steady
Governor Malhotra said the committee wanted greater clarity on the inflation outlook before acting further. Retail inflation rose to 4.4 per cent in June, crossing the RBI’s 4 per cent target for the first time in 16 months, a shift the central bank linked to temporary supply-side factors rather than a durable trend. Inflation is expected to peak in the October-December quarter before easing, with the RBI projecting consumer price inflation of 5.0 per cent for 2026-27 overall.
Growth Forecast Raised
The MPC raised its real GDP growth projection for 2026-27 to 6.7 per cent, citing resilient domestic demand and robust exports, with quarterly estimates of 7.0 per cent, 6.4 per cent, 6.5 per cent and 6.8 per cent across the four quarters. Alongside the repo rate, the Standing Deposit Facility rate stays at 5.00 per cent, and the Marginal Standing Facility and Bank Rate remain at 5.50 per cent.
What Comes Next
The MPC’s next meeting is scheduled for 5-7 October 2026, with the decision expected on the morning of 7 October. Economist surveys ahead of the meeting have generally pointed to another hold, though RBI watchers have flagged a modestly more hawkish tone in the August minutes as something to watch. As with our earlier coverage of this cycle, readers should treat any specific rate figure as accurate only as of the review it refers to, and check the RBI’s own announcements for the latest decision.
