The Reserve Bank of India’s Monetary Policy Committee has kept the policy repo rate unchanged at 5.25%, after its 62nd meeting held from August 3 to 5, 2026.
The decision was unanimous, according to the RBI press release. The meeting was chaired by RBI Governor Shri Sanjay Malhotra. MPC members Dr. Nagesh Kumar, Shri Saugata Bhattacharya, Prof. Ram Singh, Dr. Poonam Gupta and Shri Indranil Bhattacharyya attended the meeting.
Key rate decisions
With the repo rate left unchanged, other linked rates also remain the same. The standing deposit facility rate stays at 5.00%, while the marginal standing facility rate and the Bank Rate remain at 5.50%.
The MPC also decided to continue with its neutral stance. The committee said it would respond to macroeconomic developments as needed and remain focused on aligning inflation with the target.
- Policy repo rate: 5.25%
- Standing deposit facility rate: 5.00%
- Marginal standing facility rate: 5.50%
- Bank Rate: 5.50%
- Policy stance: Neutral
Growth outlook for 2026-27
The RBI said the Indian economy has remained resilient despite global headwinds. High-frequency indicators pointed to steady domestic demand in the first quarter of 2026-27. Private consumption remained strong, while investment activity was supported by indicators related to construction, capital goods and bank credit.
External demand also held up, with services exports expanding and merchandise exports rebounding, the central bank said.
At the same time, the RBI noted that the global backdrop remains unsettled. It cited market swings, persistent inflation concerns, volatile oil prices, conflict in West Asia and shifting policy expectations among central banks as risks to the outlook.
Domestically, the RBI flagged deficient and uneven south-west monsoon conditions amid El Niño as a risk for agriculture and rural demand. It said the impact could be partly contained by supply-side steps, crop diversification, climate-resilient and short-duration crops, and water conservation measures.
The MPC projected real GDP growth for 2026-27 at 6.7%. The quarterly projections are 7.0% for Q1, 6.4% for Q2, 6.5% for Q3 and 6.8% for Q4. Real GDP growth for Q1 of 2027-28 has been projected at 7.3%. The RBI said risks to growth are evenly balanced.
Inflation projections
CPI inflation rose to 4.4% in June 2026 after remaining below target for 16 consecutive months. The RBI said the June reading was still 30 basis points lower than its earlier projection for Q1 of 2026-27.
The rise in June was mainly due to higher food and fuel inflation. Food inflation was broad-based during May and June, while fuel inflation increased after retail prices were revised following a sharp rise in international energy prices. The RBI said this also affected some categories such as restaurant charges.
Core inflation, which excludes food and fuel, remained unchanged at 3.9% during May-June. Excluding precious metals, core inflation was lower at 2.3% to 2.5% during the same period.
For 2026-27, the RBI projected CPI inflation at 5.0%. The quarterly projections are 4.7% for Q2, 5.9% for Q3 and 5.5% for Q4. Inflation for Q1 of 2027-28 has been projected at 5.3%. Core inflation is projected at 4.3% for 2026-27.
The RBI said food, fuel and input cost pressures could still broaden into wider inflation, although generalised inflation pressures have remained modest so far. It also noted that adequate foodgrain stocks and proactive supply management may provide some buffer against rainfall-related risks.
Why the MPC held rates
The committee said headline inflation is expected to rise further in the near term and peak in Q3 of 2026-27, largely because of food and fuel. It also said there are limited signs so far of these pressures becoming broad-based.
On growth, the RBI said domestic demand, manufacturing, services activity and exports continue to provide support. However, it also noted that growth in 2026-27 is expected to be lower, and the outlook remains uncertain due to the monsoon, El Niño, geopolitics and global trade policy.
The MPC said more clarity is needed on inflation, including its path and composition, before any policy action is taken. The minutes of the meeting will be published on August 19, 2026. The next MPC meeting is scheduled for October 5 to 7, 2026.
Source: Reserve Bank of India Press Releases.