RBI expected to hold repo rate at 5.25 pc as MPC announces policy decision today
The Reserve Bank of India's Monetary Policy Committee is widely expected to keep the repo rate unchanged at 5.25 per cent while retaining its neutral stance. Markets will closely watch Governor Sanjay Malhotra's guidance on inflation, growth, liquidity and future policy direction.
Mumbai: Reserve Bank of India (RBI) Governor Sanjay Malhotra is set to announce the outcome of the Monetary Policy Committee’s (MPC) three-day meeting on Wednesday, with economists and market participants widely expecting the central bank to keep the benchmark repo rate unchanged at 5.25 per cent.
Many economists expect the six-member MPC to maintain the status quo on interest rates and retain its neutral policy stance.
The policy review comes at a time when inflation has edged higher in recent months, though it remains within the RBI’s tolerance band.
Rising crude oil prices, currency movements and developments in West Asia are expected to remain key factors influencing the central bank’s outlook.
At the same time, domestic economic conditions have remained resilient, supported by healthy growth momentum, favourable monsoon conditions and robust foreign capital inflows.
Experts said the focus may shift from the repo-rate decision itself to the RBI’s forward guidance on inflation, liquidity and growth.
Similarly, SBI Research said that the central bank is likely to leave policy rates unchanged as consumer price inflation is expected to remain above 5 per cent over the next two quarters, while domestic economic activity has shown signs of strengthening. The report said Q1 FY27 GDP growth could exceed 7 per cent, higher than earlier estimates.
It further stated that an explicitly dovish message from the central bank appears unlikely in view of oil price volatility, pressure on the rupee and caution over external capital flows.
However, the report noted that domestic fundamentals have improved helped by strong capital inflows in July, a recovery in foreign exchange buffers, better monsoon conditions and near-normal reservoir levels.
The August policy follows the RBI’s June review, when the MPC kept the repo rate unchanged at 5.25 per cent and retained the neutral stance while revising its inflation and growth projections amid global uncertainties.
Apart from the rate decision, investors and traders will closely track the central bank’s commentary on inflation risks, the rupee, capital flows and the broader macroeconomic outlook for indications on the future course of monetary policy.
