RBI MPC keeps repo rate at 5.25%, raises GDP forecast to 6.7%

The Reserve Bank of India's Monetary Policy Committee (MPC) on Wednesday, August 5, 2026, decided to keep the benchmark repo rate unchanged at 5.25 per cent. The decision was unanimous, with the committee maintaining a neutral stance, according to RBI Governor Sanjay Malhotra.

The repo rate is the rate at which the central bank lends short-term funds to commercial banks. A neutral stance means the MPC is not biased towards either a rate cut or a hike, giving it the flexibility to respond to changing economic conditions while keeping inflation within target.

Announcing the bi-monthly monetary policy, Governor Malhotra said the West Asia conflict continues to challenge the global economy by disrupting key trade routes. He noted that while supply-side pressures had eased in June, volatility had amplified since July due to the escalation of the conflict.

The MPC projected real GDP growth for FY27 at 6.7 per cent, which is 10 basis points higher than the previous forecast. Governor Malhotra said inflation is expected to peak in the third quarter, driven by food and fuel price inflation.

The overall economic outlook remains hazy due to a deficient monsoon, which has raised concerns about agricultural output and rural demand. However, Mr. Malhotra observed that the Indian economy has performed better than expected in the April-June quarter of the current fiscal year.

The decision to hold rates comes amid a complex global environment, with the central bank balancing growth support and inflation management. The MPC's next review is awaited with interest as the fiscal year progresses.