The Reserve Bank of India (RBI) has kept the policy repo rate unchanged at 5.25%, with the Monetary Policy Committee (MPC) unanimously deciding to maintain the existing policy stance at its meeting held from 3 to 5 August 2026. The decision reflects the central bank's cautious approach amid persistent global uncertainties, geopolitical tensions, volatile crude oil prices, and evolving inflation risks.
RBI Governor Sanjay Malhotra announced that all six MPC members voted in favour of retaining the repo rate at 5.25% while continuing with a neutral stance, allowing the central bank flexibility to respond to future economic developments based on incoming data. The RBI observed that although inflationary pressures have increased due to higher fuel prices and global developments, overall inflation remains within the statutory tolerance band of 2% to 6%, warranting a wait-and-watch approach instead of an immediate policy change.
The central bank noted that the Indian economy continues to display resilience, supported by domestic demand, investment activity and a stable financial system. At the same time, it highlighted external risks, including geopolitical conflicts, crude oil price volatility, global financial market uncertainty and weather-related factors affecting food inflation, which require close monitoring before any further policy action.
In its latest assessment, the RBI revised its FY 2026-27 real GDP growth forecast upward to 6.7% from 6.6%, citing stronger-than-expected domestic economic activity and encouraging first-quarter performance. However, the central bank cautioned that global uncertainties and inflationary pressures remain significant risks to the growth outlook.
The decision means there will be no immediate change in lending or borrowing rates linked to the repo rate. Consequently, home loan EMIs, business loan interest rates and other repo-linked borrowings are expected to remain unchanged for now, although future monetary policy decisions will continue to depend on inflation trends and macroeconomic conditions.
With the latest policy announcement, the RBI has reiterated its commitment to balancing price stability with economic growth, while retaining sufficient flexibility to respond to both domestic and global developments in the coming months. CA Sansaar