MPC meet begins as RBI weighs inflation, growth and global risks
Reserve Bank of India
Global uncertainty and inflation risks likely to keep RBI cautious despite resilient domestic growth
Mumbai: The three-day meeting of the Reserve Bank of India’s rate-setting panel began on Monday amid expectations that it will maintain the benchmark repo rate at 5.25 per cent. The Monetary Policy Committee (MPC) is scheduled to announce its decision on August 5.
With global uncertainties and inflation risks persisting, most economists expect the six-member MPC to adopt a cautious approach despite resilient domestic economic activity.
In June, the RBI kept the repo rate unchanged at 5.25 per cent and adopted a wait-and-watch stance as policymakers assessed the fallout of the West Asia conflict. It had raised its retail inflation estimate for 2026-27 to 5.1 per cent from 4.6 per cent earlier, citing higher input costs following the rise in global energy prices. It also lowered its FY27 GDP growth forecast to 6.6 per cent from 6.9 per cent.
Madan Sabnavis, Chief Economist, Bank of Baroda, expects the MPC to maintain the repo rate and stance, citing continued global uncertainty, volatile crude oil prices and currency movements. He also pointed to rising food prices amid seasonal factors and the monsoon, while noting that growth indicators remain steady.
Dipti Deshpande, Senior Director and Principal Economist, Crisil, said the RBI may prefer to wait for greater clarity on the impact of the prolonged West Asia conflict and monsoon uncertainties on growth and inflation.
D K Srivastav, Chief Policy Advisor, EY India, expects first-quarter growth at 7.1-7.3 per cent and said average CPI inflation during April-June remained close to the MPC’s 4 per cent target. He expects the repo rate to remain unchanged, with future decisions guided by data and crude oil price movements.
Vinay Pai, MD and Head of Fixed Income, Equirus Capital, said domestic inflation, liquidity and economic growth would guide policy rather than global rate movements. He expects the RBI to remain neutral and cautious if elevated global yields persist and portfolio debt inflows moderate.
Mandar Pitale, Head, Financial Markets, SBM Bank (India), said the current growth-inflation dynamics and elevated global uncertainties make an immediate rate hike unlikely.
Shrikant Goyal, Co-Founder, Getfive, said inflation remains within a manageable range and a status quo would support MSMEs and the broader economy.
RBI Governor Sanjay Malhotra will announce the MPC’s decision on August 5.
