Acknowledging that external shocks do pose upside risks to CAD, the policy statement noted that trade deals, services resilience, remittances mitigate the risks.
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 economists from the different entities on the RBI MPC’s decisions, announced earlier today:
Indranil Pan, Chief Economist, YES BANK:
“A no surprise policy but with some crucial messages. At the press conference, it was brought to clarity that headline inflation is the one that the RBI targets, while core inflation is more for the understanding of the forces behind the inflation. While small changes have come through for the growth and inflation forecasts, one should not read too deeply into these as these appear to be mere adjustments and reflect the actual data flows of Q1FY27. I think that there is no clear forward guidance and rightly so as there appears to be many moving parts critically related to the geopolitics of the West Asia. With oil, currency and other commodity prices remaining volatile from a global angle and with El Nino risks persisting domestically, the risk to inflation persists. Having said that, in the immediate horizon the inflation risks are yet to play out, including a muted pass-through of the cost pressures. While adopting a wait-and-watch for now, RBI will track incoming data and watch out for second order inflation before taking a call on rates. While all policies starting from October remain live, we think the RBI will be willing to hold back on its rate increase for the maximum period as any pre-emptive hike can dent growth.”
Ms. Anitha Rangan, Chief Economist, RBL Bank:
RBI keeps policy rate (Repo) unchanged as expected at 5.25% in a unanimous decision and also keeping stance at “Neutral”. On the view that despite expected increase in headline inflation it is not expected to get broad based into core as it driven by food and fuel, RBI kept policy rates unchanged. Governor quoted that they need greater clarity on inflation effects to recalibrate rates. Alongside inflation expectations was revised downward by 10 bp to 5% for FY27 while growth revised upwards by 10 bp to 6.75 for FY27. Acknowledging that external shocks do pose upside risks to CAD, the policy statement noted that trade deals, services resilience, remittances mitigate the risks. Capital flow measures will drive a BoP surplus. No specific measures on liquidity were announced with a commitment to manage liquidity proactively. However noted that further rate transmission has moderated with both deposit and lending rates hardening since June.
Overall, the policy statement continues to suggest that RBI is willing to wait and watch and will adopt a more reactive approach with respect to policy rates and increasingly rely on non-monetary tools (for liquidity and flows) to steer the economy. With the stance at neutral, we would think that unless geo-political pressures go for the adverse over the next two months, RBI will remain more proactive on liquidity measures in October rather on rates. The comfort on core inflation suggest that RBI is awaiting evidence for seeing sustained impact of second order effects on inflation to act on rates.”
Prachi Kele, Lead Economist, PL Capital:
“August MPC policy was in line with expectations, with the RBI maintaining a neutral stance and keeping the repo rate unchanged at 5.25%. Policy highlighted external sector facing pressures from widening trade deficit, while domestic macroeconomic conditions are growth supportive. Revised inflation and growth projections indicate resilience of the domestic economy despite headwinds from the West Asian crisis. Revival of monsoon in July, improved kharif sowing, services’ trade surplus, decent FDI inflows, and healthy remittance receipts continue to support India's macroeconomic fundamentals.”
Debopam Chaudhuri, Chief Economist, Piramal Group:
“The RBI's decision to maintain both the policy rate and its neutral stance was widely expected, but the 40 bps downward revision in the Q2 inflation forecast was the key surprise. By reiterating that inflation remains largely supply-driven rather than broad-based, the MPC has created room for another pause in October before any potential rate hike in February 2027. This should cap any sharp rise in corporate borrowing costs over the next few months and provide greater funding certainty for banks, NBFCs and corporates.
Unlike the recent market reaction to the US Federal Reserve's pause, Indian bond and equity markets have remained stable after RBI’s pause, reflecting stronger investor confidence in the Indian central bank’s ability to balance inflation management with growth. This is a positive for FPI and FDI inflows. With crude oil below USD 80 per barrel and expected FCNR(B) inflows supporting rupee liquidity, the macro environment has become more favourable for India despite global uncertainties.”
