RBI Keeps Repo Rate Unchanged at 5.25% in August 2026

• The RBI has kept the repo rate unchanged at 5.25% for the third consecutive time.
• Real GDP growth for 2026-27 is projected at 6.7%, with quarter-wise projections showing a moderate pace of growth.
• CPI inflation is projected to rise in the near term due to food and fuel prices, but core inflation remains benign.

The RBI has observed that the Indian economy remains resilient despite global headwinds, supported by robust private consumption, continued investment activity, and strong services exports.

The Reserve Bank of India (RBI) has maintained its neutral policy stance for the third consecutive time, keeping the repo rate unchanged at 5.25%. This decision was made by the Monetary Policy Committee (MPC), which met from August 3 to 5 under the chairmanship of RBI Governor Sanjay Malhotra. The MPC's assessment of evolving domestic and global macroeconomic conditions led them to unanimously vote for this decision.

The RBI has observed that the Indian economy remains resilient despite global headwinds, supported by robust private consumption, continued investment activity, and strong services exports. Real GDP growth for 2026-27 has been projected at 6.7%, while quarter-wise GDP growth projections are: 7.3% for Q1 of 2027-28.

The RBI has projected CPI inflation at 5.0% for 2026-27, with quarter-wise inflation projections showing an increase in the near term due to food and fuel prices. However, core inflation excluding precious metals remains benign, indicating that growth is expected to moderate in 2026-27. The MPC noted that while inflation is projected to rise, it has not yet become broad-based.

The RBI highlighted risks arising from global market volatility, geopolitical tensions, volatile oil prices, and global trade policy uncertainty, which warrant caution before any policy rate action.

The Indian economy is expected to continue its growth trajectory, supported by robust private consumption, continued investment activity, and strong services exports. The RBI's projections for 2026-27 show a real GDP growth of 6.7%, with quarter-wise GDP growth projections indicating a moderate pace of growth.

However, the MPC emphasized that it will remain vigilant and committed to aligning inflation with the target while responding appropriately to evolving macroeconomic conditions.

Lawyers should watch for the RBI's continued neutral stance and potential impact on lending rates, which may affect their clients' borrowing costs.

Source: Original reporting via RBI Monetary Policy Statement