New Delhi: The Reserve Bank of India’s Monetary Policy Committee (MPC) has decided to keep the policy repo rate unchanged at 5.25%, RBI Governor Sanjay Malhotra said while announcing the outcome of the panel’s third bi-monthly meeting of financial year 2026-27, held on August 3, 4, and 5.
Consequently, the standing deposit facility rate remains unchanged at 5%, while the marginal standing facility rate and the Bank Rate remain at 5.50%. The MPC also decided to continue with its neutral stance. The decision to hold rates was unanimous.
In a press release, the governor said the West Asia conflict continues to disrupt global trade routes and supply chains, amplifying market volatility and weighing on business sentiment. Fresh US tariffs have added to trade uncertainty, with global growth projected to soften and inflation forecasts for 2026 running higher than the previous year.
On inflation, Malhotra noted that headline CPI inflation rose to 4.4% in June 2026 after staying below the target for 16 consecutive months. However, this was 30 basis points lower than earlier projections for the quarter. The rise was mainly driven by higher food and fuel prices, with core inflation excluding food and fuel steady at 3.9% during May-June. CPI inflation for 2026-27 is projected at 5%, with inflation expected to peak in the third quarter before moderating.
On growth, the governor said domestic economic activity has remained resilient, supported by strong manufacturing and services activity and robust exports, reaffirming India’s position as the world’s fastest-growing major economy. Real GDP growth for 2026-27 is projected at 6.7%, with the first quarter at 7%, second at 6.4%, third at 6.5%, and fourth at 6.8%.
On the external sector, India’s current account recorded a surplus of USD 2.8 billion during April-May, led by a robust services trade surplus and strong remittance receipts. Gross foreign direct investment inflows stood at USD 30.7 billion during April-June 2026, up from USD 26.7 billion a year earlier.
Foreign portfolio investment saw a turnaround in June-July with net inflows of USD 7.1 billion, after outflows in April-May. India’s forex reserves remain adequate, with an import cover of over 10 months.
The governor also announced additional measures for the cooperative sector, including draft guidelines for resuming licensing of Urban Cooperative Banks and draft directions on the Credit Monitoring Arrangement for Rural Cooperative Banks.
The RBI further proposed to harmonise and standardise the regulatory framework on interest rates on advances across all regulated entities to enhance transparency and strengthen consumer protection.
