RBI MPC meeting begins today: Repo rate pause likely as inflation, crude oil risks keep policymakers cautious
RBI's six-member Monetary Policy Committee (MPC) began its three-day meeting on Monday, with economists and market participants widely expecting policymakers to keep the benchmark repo rate unchanged at 5.25% while retaining the neutral policy stance.
- Aug 3, 2026,
- Updated Aug 3, 2026 10:10 AM IST
The Reserve Bank of India's Monetary Policy Committee (MPC) begins its three-day meeting on Monday, with economists unanimously expecting the central bank to leave the benchmark repo rate unchanged at 5.25%. The policy decision, due on Wednesday, is expected to reflect a cautious approach amid rising inflation, volatile crude oil prices and global uncertainties.
An Informist poll of 18 economists and market experts showed unanimous expectations of a status quo at the conclusion of the meeting on August 5. The RBI has held the repo rate steady over the last three policy meetings after cutting it by a cumulative 125 basis points in 2025, marking its biggest annual easing cycle since 2019.
Inflation, crude oil
While India's economy continues to show resilience, policymakers are expected to tread cautiously amid rising inflationary pressures and renewed geopolitical tensions.
Retail inflation accelerated to an 18-month high of 4.38% in June, moving above the RBI's medium-term target of 4%. However, most economists believe the central bank will retain its FY27 inflation forecast of 5.1%, arguing that recent price pressures have largely been driven by supply-side disruptions rather than broad-based demand.
Crude oil remains one of the biggest concerns. After briefly easing following a ceasefire between the US and Iran in June, Brent crude has rebounded amid renewed tensions in West Asia, raising concerns over imported inflation. Elevated oil prices could eventually feed into transport costs and broader consumer prices if sustained.
MUST READ: RBI's new FD rules from October 1: What fixed deposit investors need to know
"The policy is expected to be a wait-and-watch policy as RBI navigates the impact of already announced measures and lingering macro risks," HDFC Bank Principal Economist Sakshi Gupta said, adding that the central bank is unlikely to revise either the policy rate or its inflation projections.
Key Factors the RBI Will Watch
| Factor | Why It Matters |
|---|---|
| Crude oil prices | Higher oil prices could fuel imported inflation |
| West Asia conflict | Geopolitical tensions may affect inflation and external stability |
| Monsoon progress | Below-normal rainfall could push up food inflation |
| Retail inflation | CPI remains above the RBI's 4% target |
| US Federal Reserve | Higher US rates could impact capital flows and the rupee |
| Liquidity conditions | RBI will assess banking system liquidity before any policy shift |
| Rupee movement | Stable foreign inflows have reduced near-term currency risks |
| Economic growth | RBI aims to balance inflation control with supporting growth |
Growth outlook seen stable
Economists also expect the RBI to leave its FY27 GDP growth forecast unchanged at 6.6%.
ANZ economist Dhiraj Nim said there is little reason for the central bank to alter its macroeconomic projections given continuing uncertainty over oil prices and external conditions. Barclays also expects the MPC to avoid reacting to temporary inflation spikes, warning that premature tightening could undermine economic growth while geopolitical risks remain elevated.
The progress of the southwest monsoon will be another closely watched factor. The India Meteorological Department has forecast below-normal rainfall at 90% of the long-period average, while cumulative rainfall remains below normal. A weak monsoon could push up food prices, dampen rural demand and increase fiscal pressures through higher subsidy requirements.
RBI August MPC Meeting: Economists' Expectations
| Organisation | August MPC Meeting Expectation |
|---|---|
| ANZ Banking Group | Status quo |
| Bank of Baroda | Status quo |
| Barclays | Status quo |
| CSB Bank | Status quo |
| Emkay Global Financial Services | Status quo |
| HDFC Bank | Status quo |
| IDFC FIRST Bank | Status quo |
| ICICI Securities Primary Dealership | Status quo |
| India Ratings | Status quo |
| Karur Vysya Bank | Status quo |
| Kotak Mahindra Bank | Status quo |
| Motilal Oswal Financial Services | Status quo |
| SBM Bank India | Status quo |
| Shinhan Bank India | Status quo |
| Standard Chartered Bank | Status quo |
| STCI Primary Dealership | Status quo |
| Sunidhi Securities | Status quo |
| YES Bank | Status quo |
Source: Informist
Focus on liquidity and foreign inflows
The MPC is also expected to assess the impact of measures announced in June to strengthen capital inflows and support the rupee. These included concessional foreign exchange swap facilities for FCNR(B) deposits, relaxed norms for overseas borrowings and wider investment avenues for government securities.
RBI Governor Sanjay Malhotra recently said these initiatives have helped mobilise nearly $32 billion in foreign capital so far, reducing near-term risks to the currency. Economists therefore do not expect fresh measures to support the rupee at this meeting.
ALSO READ: RBI says interest rates on deposits must be uniform, but banks get more flexibility on bulk deposits
Market participants will instead closely monitor the RBI's commentary on inflation risks, liquidity conditions and external developments, particularly the US Federal Reserve's hawkish stance. While most analysts expect the central bank to remain on hold this week, some believe a prolonged period of crude oil prices above $90 per barrel or a sustained rise in inflation could strengthen the case for a rate hike later this year. Others argue that maintaining policy flexibility through a neutral stance remains the RBI's best course amid an uncertain global environment.
The Reserve Bank of India's Monetary Policy Committee (MPC) begins its three-day meeting on Monday, with economists unanimously expecting the central bank to leave the benchmark repo rate unchanged at 5.25%. The policy decision, due on Wednesday, is expected to reflect a cautious approach amid rising inflation, volatile crude oil prices and global uncertainties.
An Informist poll of 18 economists and market experts showed unanimous expectations of a status quo at the conclusion of the meeting on August 5. The RBI has held the repo rate steady over the last three policy meetings after cutting it by a cumulative 125 basis points in 2025, marking its biggest annual easing cycle since 2019.
Inflation, crude oil
While India's economy continues to show resilience, policymakers are expected to tread cautiously amid rising inflationary pressures and renewed geopolitical tensions.
Retail inflation accelerated to an 18-month high of 4.38% in June, moving above the RBI's medium-term target of 4%. However, most economists believe the central bank will retain its FY27 inflation forecast of 5.1%, arguing that recent price pressures have largely been driven by supply-side disruptions rather than broad-based demand.
Crude oil remains one of the biggest concerns. After briefly easing following a ceasefire between the US and Iran in June, Brent crude has rebounded amid renewed tensions in West Asia, raising concerns over imported inflation. Elevated oil prices could eventually feed into transport costs and broader consumer prices if sustained.
MUST READ: RBI's new FD rules from October 1: What fixed deposit investors need to know
"The policy is expected to be a wait-and-watch policy as RBI navigates the impact of already announced measures and lingering macro risks," HDFC Bank Principal Economist Sakshi Gupta said, adding that the central bank is unlikely to revise either the policy rate or its inflation projections.
Key Factors the RBI Will Watch
| Factor | Why It Matters |
|---|---|
| Crude oil prices | Higher oil prices could fuel imported inflation |
| West Asia conflict | Geopolitical tensions may affect inflation and external stability |
| Monsoon progress | Below-normal rainfall could push up food inflation |
| Retail inflation | CPI remains above the RBI's 4% target |
| US Federal Reserve | Higher US rates could impact capital flows and the rupee |
| Liquidity conditions | RBI will assess banking system liquidity before any policy shift |
| Rupee movement | Stable foreign inflows have reduced near-term currency risks |
| Economic growth | RBI aims to balance inflation control with supporting growth |
Growth outlook seen stable
Economists also expect the RBI to leave its FY27 GDP growth forecast unchanged at 6.6%.
ANZ economist Dhiraj Nim said there is little reason for the central bank to alter its macroeconomic projections given continuing uncertainty over oil prices and external conditions. Barclays also expects the MPC to avoid reacting to temporary inflation spikes, warning that premature tightening could undermine economic growth while geopolitical risks remain elevated.
The progress of the southwest monsoon will be another closely watched factor. The India Meteorological Department has forecast below-normal rainfall at 90% of the long-period average, while cumulative rainfall remains below normal. A weak monsoon could push up food prices, dampen rural demand and increase fiscal pressures through higher subsidy requirements.
RBI August MPC Meeting: Economists' Expectations
| Organisation | August MPC Meeting Expectation |
|---|---|
| ANZ Banking Group | Status quo |
| Bank of Baroda | Status quo |
| Barclays | Status quo |
| CSB Bank | Status quo |
| Emkay Global Financial Services | Status quo |
| HDFC Bank | Status quo |
| IDFC FIRST Bank | Status quo |
| ICICI Securities Primary Dealership | Status quo |
| India Ratings | Status quo |
| Karur Vysya Bank | Status quo |
| Kotak Mahindra Bank | Status quo |
| Motilal Oswal Financial Services | Status quo |
| SBM Bank India | Status quo |
| Shinhan Bank India | Status quo |
| Standard Chartered Bank | Status quo |
| STCI Primary Dealership | Status quo |
| Sunidhi Securities | Status quo |
| YES Bank | Status quo |
Source: Informist
Focus on liquidity and foreign inflows
The MPC is also expected to assess the impact of measures announced in June to strengthen capital inflows and support the rupee. These included concessional foreign exchange swap facilities for FCNR(B) deposits, relaxed norms for overseas borrowings and wider investment avenues for government securities.
RBI Governor Sanjay Malhotra recently said these initiatives have helped mobilise nearly $32 billion in foreign capital so far, reducing near-term risks to the currency. Economists therefore do not expect fresh measures to support the rupee at this meeting.
ALSO READ: RBI says interest rates on deposits must be uniform, but banks get more flexibility on bulk deposits
Market participants will instead closely monitor the RBI's commentary on inflation risks, liquidity conditions and external developments, particularly the US Federal Reserve's hawkish stance. While most analysts expect the central bank to remain on hold this week, some believe a prolonged period of crude oil prices above $90 per barrel or a sustained rise in inflation could strengthen the case for a rate hike later this year. Others argue that maintaining policy flexibility through a neutral stance remains the RBI's best course amid an uncertain global environment.