Noida, Aug 5 (APAC Media): The Reserve Bank of India (RBI) on Wednesday kept its key repo rate unchanged at 5.25%, as the Monetary Policy Committee (MPC) balanced the need to support economic growth with concerns over inflationary pressures and an uncertain global economic outlook, the central bank said.
The decision was announced after the three-day MPC meeting, held from August 3 to August 5, under the chairmanship of RBI Governor Sanjay Malhotra. The rate decision was unanimous, with all MPC members voting in favour of maintaining the status quo.
Along with the repo rate, the central bank retained the Standing Deposit Facility (SDF) rate at 5%. The Marginal Standing Facility (MSF) rate and the bank rate were also kept unchanged at 5.5%.
“Taking into account the evolving macroeconomic conditions, the MPC decided to keep the policy repo rate unchanged and continue with a neutral stance,” RBI Governor Sanjay Malhotra said.
The RBI’s policy decision comes amid heightened global uncertainties, including the impact of the ongoing US-Iran conflict in the Middle East on energy prices, inflation trends and economic activity.
“The re-escalation of the conflict since the first week of July has amplified volatility in energy prices,” Malhotra said. He added that early corporate results for the first quarter indicated healthy performance in the manufacturing sector, while private consumption continued to be supported by strong discretionary spending.
“Overall, the Indian economy performed better than expected in Q1,” the RBI Governor added.
Points that sum up the Monetary Policy announcement on August 05, 2026:
•Policy Repo Rate remains unchanged at 5.25%
•Marginal Standing Facility (MSF) & Bank Rate remains at 5.50%
•Standing Deposit Facility (SDF) remains at 5.00%
•Real GDP growth for 2026-27 is projected at…— ReserveBankOfIndia (@RBI) August 5, 2026
RBI X Handle
Growth Outlook Revised Upward
The RBI raised its real GDP growth forecast for FY27 to 6.7% from the earlier estimate of 6.6%, citing stronger-than-expected domestic economic activity.
The central bank increased its Q1 FY27 GDP growth projection to 7% from 6.6% and revised the Q2 forecast upward to 6.4% from 6.3%. The Q3 growth estimate was retained at 6.5%, while the Q4 projection remained unchanged at 6.8%.
The RBI said the growth outlook continues to remain resilient, supported by domestic demand conditions and improving economic activity.
“The framework is clearly defined, and there should be no ambiguity regarding its objectives. Our focus remains on achieving the headline inflation target assigned to us. We will continue to be guided by this mandate, and it remains our commitment and endeavour to bring headline inflation in line with the target over the medium term,” Malhotra said at the post-policy press conference.
Inflation Projection Lowered
The RBI lowered its CPI inflation forecast for FY27 to 5% from the previous estimate of 5.1%.
The inflation projection for the first quarter of FY27 was revised down to 4.1% from 4.2%, while the Q2 forecast was reduced to 4.7% from 5.1%. The central bank retained the Q3 inflation estimate at 5.9% and marginally increased the Q4 projection to 5.5% from 5.4%.
The MPC said it would continue to closely monitor incoming data and global developments while taking appropriate policy measures to maintain price stability and support sustainable growth.
What experts say on RBI’s rate pause?
“The Monetary Policy Committee (MPC) of the Reserve Bank of India has decided to keep the policy repo rate unchanged at 5.25% while maintaining a neutral stance. Inflation remains within the target range of plus/minus 4%; upside risks are being posed by geopolitical headwinds and global energy prices and deficient monsoons due to El Niño conditions,” says Mr Rajeev Juneja, President, PHDCCI.
“The RBI’s decision to keep the policy repo rate unchanged at 5.25% adds to stability when global uncertainties continue to impact investment sentiment. Indian domestic growth remains resilient despite external headwinds. The commitment to capital expenditure in the Union Budget of ₹12.22 lakh crore continues to support infrastructure creation, while the RBI’s steady hand on rates provides comfort on the macroeconomic front even as inflation is expected to firm up slightly before easing later in the year,” said Amit Goenka, MD of Nisus Finance.
“The RBI’s decision to keep the repo rate unchanged at 5.25%, while maintaining a neutral policy stance and projecting GDP growth of 6.7%, reflects confidence in the resilience of the Indian economy despite persistent global uncertainties. Continued public investment in infrastructure and capital expenditure remains a key driver of economic growth and reinforces India’s long-term development trajectory,” said Rajan Luthra, CFO, ACE Ltd.
Oil Prices Jump as Iran Denies U.S. Talks, Strait of Hormuz Supply Risks Return
“For a capital-intensive sector like energy, the RBI holding the repo rate at 5.25% with a neutral stance is a steadying signal. Power and storage infrastructure carries long payback periods, and after last year’s rate cuts, a stable borrowing environment keeps financing costs predictable for developers and EPC companies. That is often what moves a project from planning into execution.” – Piyush Goyal, Co-Founder & CEO, Volks Energie.
“The RBI’s decision to maintain the repo rate at 5.25% brings stability to the real estate sector, supporting buyer confidence, predictable home loan rates, and steady growth momentum for the housing market,” Yateesh Wahaal, director, M3M India, said.
“The RBI’s decision to maintain the repo rate at 5.25 per cent reflects a balanced approach towards economic growth and macroeconomic stability. For the real estate sector, stable interest rates provide greater certainty, boost buyer confidence, and support affordability. The move will help homebuyers make informed decisions while enabling developers to plan investments and execute projects with confidence, sustaining positive market sentiment and growth momentum,” Ashish Sharma, AVP Operations, Brahma Group, said.
–ENDS–
Disclaimer: This article is for informational purposes only. APAC Media is not liable for any investment decisions or losses. Please conduct your own research or consult a financial advisor before investing.
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