Mumbai, August 3. The three-day meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) began on Monday. Key monetary policies, including the repo rate, and the country’s economic situation will be reviewed at this meeting. RBI Governor Sanjay Malhotra will announce the meeting’s decisions at 10 a.m. on Wednesday. This meeting is taking place at a time when the global economy is facing challenges such as high crude oil prices, geopolitical tensions, tight monetary policies by major central banks, and rising bond yields. Consequently, the market and investors are closely watching the RBI’s decision.
Repo rate change unlikely
Market experts and many analysts believe that the six-member MPC may keep the repo rate unchanged at 5.25 percent this time. They believe that given inflation and global risks, the RBI may refrain from making any changes to interest rates for the time being.
What did SBI Research say?
According to an SBI Research report, consumer price index (CPI)-based inflation is likely to remain above 5 percent for the next two quarters. At the same time, the central bank may keep current policy rates unchanged due to signs of strengthening domestic economic activity.
The report also stated that GDP growth in the first quarter of FY 2026-27 could exceed 7 percent, which is better than earlier estimates. However, given fluctuations in crude oil prices, pressure on the rupee, and volatility in foreign capital flows, the RBI is unlikely to adopt a very accommodative stance.
Positive Signals for the Domestic Economy
According to the report, fundamental indicators of the domestic economy strengthened in July due to strong foreign capital inflows, improved foreign exchange reserves, a better monsoon, and normal reservoir levels. This is expected to support economic activity.
Repo rate was not changed in June either
It is noteworthy that in the last MPC meeting held in June, the RBI unanimously kept the repo rate at 5.25 percent and maintained its monetary policy stance as neutral. However, in view of geopolitical tensions and global conditions, the central bank had lowered the GDP growth forecast for FY 2026-27 to 6.6 per cent.