For the broader market, this policy reinforces a supportive macro backdrop.
FinTech BizNews Service
Mumbai, 5 August, 2026: The Monetary Policy Committee (MPC) held its 62nd meeting from August 3 to 5, 2026, under the chairmanship of Shri Sanjay Malhotra, Governor, Reserve Bank of India. After a detailed assessment of the evolving macroeconomic and financial developments and the outlook, the MPC voted unanimously to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 5.25 per cent. Consequently, the standing deposit facility (SDF) rate remains at 5.00 per cent and the marginal standing facility (MSF) rate and the Bank Rate remain at 5.50 per cent. The MPC also decided to continue with the neutral stance.
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Here are the views of the leading voices from the Mutual Fund sector on the RBI MPC’s decisions, announced earlier today:
Sachin Sawrikar, Managing Partner, Artha Bharat Investment Managers IFSC LLP:
The RBI's decision to hold rates at 5.25 percent can be seen as a confident stance. The RBI Governor is managing two variables at once, a West Asia conflict that keeps crude prices and global risk sentiment on edge, and a rupee that has in the recent past shown some sturdiness against what the geopolitical risks would otherwise suggest, holding in the 94 to 96 band against the dollar. That combination gives the MPC room to stay still rather than react to every headline, or every social media post, out of the region.
This calm is conditional, if the conflict widens and crude climbs further, taking the dollar up with it, the RBI may have to respond even before its next scheduled meeting. It will step in to protect the rupee first, using liquidity tools and direct market intervention, and only look at rates after that. This should be read as a pause, not a sign that the external risk is behind us. For Indian markets, the bigger issue over the next few months isn't the repo rate, it's how much more geopolitical pressure the rupee can take before the central bank has to step in harder.
Gopal Jain, Managing Director & CEO of Gaja Alternative Asset Management:
"The Monetary Policy Committee's decision to hold the repo rate at 5.25% and retain a neutral stance reflects a measured, data-dependent approach in the midst of considerable global uncertainty. Policy continuity and predictability of this kind are, in themselves, valuable — they give India's businesses and long-term capital a stable footing from which to plan."
Vaibhav Chugh, CEO, Abakkus Mutual Fund:
“RBI’s decision to keep rates unchanged reflects a balanced and prudent approach amid persistent global uncertainties and inflation risks.
Encouragingly, India’s growth outlook remains resilient, supported by strong domestic demand, healthy credit growth and sustained investments.
Despite ongoing global challenges, India has demonstrated remarkable resilience, supported by strong domestic fundamentals, a stable policy environment, and sustained economic momentum. As a result, the country continues be be viewed as an attractive destination for long-term investments.
With GDP growth projected at 6.7% for FY27, the economy remains on a firm footing. While inflation will require close monitoring, India’s macroeconomic fundamentals remain strong.
We remain constructive on the country’s medium to long-term outlook, as policy continuity, improving investment activity, and expanding opportunities across sectors continue to create a favourable environment for investment and potential wealth creation.”
Prashant Pimple, Chief Investment Officer - Fixed Income, Baroda BNP Paribas Mutual Fund:
“The RBIs Monetary Policy Committee (MPC), voted unanimously to hold the benchmark repurchase rate at 5.25% for a fourth consecutive review, retaining its neutral stance. The decision was in line with broad market expectations. The MPC cited elevated energy costs stemming from the Middle east conflict as a key risk, with headline inflation expected to rise in the near term and peak in the third quarter driven primarily by fuel and food prices, while core inflation continues to remain benign. On the growth and inflation outlook, the RBI raised its FY27 GDP forecast to 6.7% from a previous estimate of 6.60% and lowered its full-year CPI inflation projection to 5.0% from 5.10%, with Q2 FY27 CPI seen at 4.7%. With the neutral stance retained in the current policy, the bar for rate move in 2026 calendar year appears higher.”
Kaustubh Gupta, CIO – Fixed Income, Aditya Birla Sun Life AMC:
"The MPC's decision to keep the policy repo rate unchanged at 5.25% while retaining the neutral stance was in line with market expectations. The upward revision in FY27 GDP growth to 6.7% and lower inflation forecast of 5.0% reflect confidence in the resilience of the domestic economy despite an uncertain global environment. For investors, this signals a continuation of a stable policy environment, with inflation remaining largely supply-driven rather than demand-led. While the RBI continues to monitor risks from an uneven monsoon, volatile energy prices and geopolitical developments, its current stance provides greater visibility on the interest rate outlook. We expect the RBI to remain on pause through the remainder of 2026 unless supply-side pressures translate into sustained, broad-based inflation, supporting a relatively stable environment for both borrowers and long-term investors."
Deepak Agrawal, CIO-Debt, Kotak Mahindra AMC:
The RBI’s decision to keep the repo rate unchanged at 5.25% and maintain a neutral stance was largely in line with expectations. The policy outcome carries a mildly dovish undertone, with the inflation forecast for FY27 revised lower to 5.0% while the growth projection has been raised to 6.7%, highlighting improving macroeconomic fundamentals. The moderation in inflation expectations has been driven by easing energy prices following reduced West Asia tensions, although geopolitical risks continue to warrant caution. At the same time, growth remains resilient, supported by healthy export momentum, robust private consumption, recent trade agreements and an improving balance of payments position aided by RBI’s forex and capital flow measures. The RBI has rightly reiterated its data-dependent approach going forward. Despite markets continuing to price in policy rate hikes over the next 6-12 months, the softer-than-expected tone of the policy has supported bond markets, with the 10-year G-Sec yield declining around 3 bps to 6.78% post the announcement."
Sandeep Neema, Director and Fund Manager, PL Asset Management:
“Today's RBI decision to hold rates at 5.25 per cent was on expected lines and markets are unlikely to see any sharp reaction. The GDP upgrade to 6.7 per cent for FY27 is a quiet confidence signal on the domestic growth outlook, reflecting the resilience of the Indian economy despite a challenging global environment. The MPC's acknowledgement of robust domestic demand, sustained government capital expenditure, and a well-capitalised banking system further reinforce this constructive view. Inflation is a near-term watch item, but the trajectory remains one of moderation beyond Q3. Rate-sensitive sectors, banking, NBFCs, real estate, and capital goods, remain well positioned with fundamentals intact, supported by stable borrowing costs and favourable financing conditions. For the broader market, this policy reinforces a supportive macro backdrop. We remain constructive, with financials, industrials, metals and consumption-oriented sectors offering the most compelling opportunities. Volatility, if any, should be used as an entry point rather than a reason for caution.”
Suyash Choudhary, CIO - Fixed Income, Bandhan AMC:
The RBI / MPC kept policy rates unchanged in line with consensus expectations. Thankfully, an outlier risk of stance getting changed didn’t materialise. Further, the general assessment with respect to the growth-inflation trade-off remains relatively benign, thereby indicating little urgency on any rate hikes.
1. H1 average CPI forecast stands much lower than June projection. This partly reflects lower realised readings in Q1.
2. Core CPI forecast for the full year has been lowered by 40 bps to 4.3%, thereby reflecting lower expected generalisation than earlier feared.
Assessment
In line with the above forecasts, RBI / MPC continue to assess that the rise in inflation thus far is mostly on account of fuel and food with little signs of generalisation of price pressures so far. The further rise in headline CPI ahead, peaking in Q3 FY27, is also likely to be primarily due to food and fuel. The MPC specifically notes that inflation is not getting broad-based, core inflation remains moderate and is expected to decline after peaking in Q3. Meanwhile, core inflation excluding precious metals, characterised as ‘underlying inflation’, is likely to align with core inflation towards the end of the financial year.
Growth is seen as resilient thus far but still expected to be lower in the current financial year. Furthermore, the outlook is hazy owing to the monsoons, geopolitics, and global trade policy.
On net, the policy characterisation is one of wait and watch with little urgency on account of any imminent generalisation risks from inflation. If at all a bias is revealed on policy action, it is in the statement: “Any such action would also have to consider the need for recalibration of policy rates in line with the evolving growth-inflation dynamics, especially the normalisation of the underlying inflation from its benign levels seen hitherto.” Simply put, inflation is normalising from very low levels, and therefore the MPC seems to be keeping an open mind that down the line some modest rate hikes may very well be needed. However, the need is not felt yet, so the timing is uncertain. Further, whether the need eventually translates into action or dissipates on its own if inflation generalisation risks continue to not materialise, also seems uncertain at this point.
Takeaways
The RBI / MPC assessment is consistent with our own reading of their reaction function (see, “Re-escalation: A Macro And Bond Update, dated 14th July). Our view on RBI policy remains the same: not more than 50 bps of hikes and not before October. The negative assertion here is intentional since we, like the MPC, aren’t sure whether these 50 bps will also eventually happen or not.
It is to be noted that given the level of market yields for the most part, calibrated 25 – 50 bps hikes eventually may be of little consequence. Rather, what matters more is whether there can be a more sustained alleviation of external account pressures, thereby leading to relief on the rupee, and therefore cessation of the ‘impossible trinity’ dynamic that has been in play for us over the last few quarters. In this regard: 1> the higher than initially expected FCNR flow provides strong temporary cushion, thereby allowing time for more measures to incentivise capital of a more permanent nature into the country, 2> should the AI trade continue to cool off, it may ease dollar strength and pressure on US rates as well as incentivise diversification of capital flows into other geographies like India 3> should recent concerns with respect to pace of capital spending by AI ecosystem companies lead to some spreading out of build out, this will more directly help ease pressures on developed market interest rates.
Our portfolio preference remains for up to 3 – 4 years corporate bonds and 15 – 40 years government bonds. Assuming relevant suitable investment horizons, we think valuations here are very decent. Sustained value unlocking, however, will require continued de-escalation in geopolitical risks, as well as some of the pieces discussed above continuing to fall into place. Money market rates have fallen recently but still look reasonably valued given: 1> higher FCNR flows directly alleviating credit to deposit ratio pressures 2> likelihood of very modest RBI rate hikes if at all.”
