Big Relief for Borrowers? RBI Holds Repo Rate at 5.25%, Raises GDP Growth Forecast

The RBI's Monetary Policy Committee kept the repo rate unchanged at 5.25% and retained its neutral stance. The central bank raised its FY27 GDP growth forecast to 6.7% while warning of inflation risks.

Post Published By: Sreeja Chowdhury

Updated : 5 August 2026, 10:58 AM IST

RBI Governor Sanjay Malhotra (Img: X)

Mumbai: The Reserve Bank of India (RBI) on Wednesday kept the benchmark repo rate unchanged at 5.25%, with the six-member Monetary Policy Committee (MPC) unanimously voting to maintain the current rate. The central bank also retained its neutral policy stance, signalling a cautious approach as it monitors inflation and global economic developments.

The decision was announced by RBI Governor Sanjay Malhotra following the conclusion of the MPC meeting.

Inflationary Concerns Haunt the RBI

While delivering the policy statement, the Governor Malhotra pointed out that the world economic situation still faces a lot of uncertainties because of geopolitical concerns, new tariff issues and problems faced in critical supply chains.

However, he added that inflation is likely to increase in the near future due to increasing prices of food and fuel. As per RBI, inflation will reach its peak in the third quarter before slowly falling. But it must be pointed out here that inflationary pressures witnessed at present by the RBI are confined to certain sectors and do not have a wide spread.

The uncertainties about the southwest monsoon and El Niño are among other risk factors that can affect inflation and economic growth.

India's GDP Growth Forecast Revisions Positive

Despite the challenges that have been faced globally, the Reserve Bank of India was quite optimistic about the robustness of India's economy. In this context, the central bank revised upwards its estimate of the GDP growth rate for the current fiscal year from 6.6% to 6.7%.

On the downside, the RBI warned that tensions once again flaring up in West Asia and volatility in international financial markets could be detrimental to India's economic growth.

Markets Look at RBI's Forecasts

The rate-setting move came in line with the market predictions; however, it is noted that the forecasts made by the economic experts were that the central bank will leave interest rates unchanged while keeping an eye on the trends in inflation.

Moving ahead, the forecast regarding inflation, international prices of crude oil and the rains will be kept under observation by the markets.