With the decision, the Standing Deposit Facility (SDF) rate remains at 5.00 per cent, while the Marginal Standing Facility (MSF) rate and the Bank Rate continue at 5.50 per cent.
Read more – RBI MPC meeting August 2026 highlights: Repo rate decision, inflation outlook & GDP forecast; key takeaways from Governor Sanjay Malhotra’s speech
The meeting was chaired by RBI Governor Sanjay Malhotra and attended by MPC members Dr Nagesh Kumar, Saugata Bhattacharya, Prof. Ram Singh, Dr Poonam Gupta and Indranil Bhattacharyya.
Why did the RBI leave the repo rate unchanged?
Explaining the decision, the MPC said the economy continues to remain resilient despite heightened global uncertainty, while inflation is expected to rise in the coming months before easing.
The committee noted that although growth remains strong, there is still uncertainty surrounding the south-west monsoon, El Niño conditions, geopolitical tensions and global trade policies. It said greater clarity on the future path of inflation is needed before considering any change in monetary policy.
The RBI added that it would continue to closely monitor economic developments and remain committed to bringing inflation in line with its target.
RBI raises GDP growth forecast for FY27
The central bank projected real GDP growth at 6.7 per cent for 2026-27, an improvement over its previous estimate.
According to the RBI, growth is expected to remain healthy across the year, with 7.0 per cent in the first quarter, 6.4 per cent in the second quarter, 6.5 per cent in the third quarter and 6.8 per cent in the fourth quarter. It has also projected 7.3 per cent growth for the first quarter of FY28.
The RBI said risks to the growth outlook remain evenly balanced.
Inflation projected at 5% for the current financial year
The MPC revised its inflation outlook and projected consumer price index (CPI) inflation at 5.0 per cent for FY27.
Inflation is expected to average 4.7 per cent in the second quarter, 5.9 per cent in the third quarter and 5.5 per cent in the fourth quarter. For the first quarter of FY28, the RBI has projected inflation at 5.3 per cent, with risks considered evenly balanced.
The central bank said headline inflation is likely to increase in the near term before peaking in the third quarter and moderating thereafter.
Food and fuel remain the biggest drivers of inflation
According to the RBI, headline inflation rose to 4.4 per cent in June 2026, mainly because of higher food and fuel prices.
The MPC said food inflation became broad-based during May and June, while fuel inflation increased following the rise in international energy prices. Despite these pressures, core inflation remained at 3.9 per cent, and core inflation excluding precious metals stayed even lower, indicating that underlying demand pressures remain contained.
The committee stressed that the recent increase in inflation is largely supply-driven rather than broad-based across the economy.
Global risks continue to weigh on the outlook
The RBI said the global economy remains volatile, citing the renewed conflict in West Asia, elevated oil prices, persistent inflation concerns and uncertainty over global trade policies.
It also pointed to a stronger US dollar, higher bond yields and fragile public finances in several major economies as downside risks to global growth.
According to the central bank, these external developments continue to create uncertainty for emerging economies, including India.
Domestic economy remains resilient
Despite global challenges, the RBI said India’s economy has continued to perform strongly.
Private consumption remained robust during the first quarter, while investment activity was supported by healthy construction activity, capital goods demand and strong bank credit growth. The central bank also noted that services exports remained strong and merchandise exports had recovered.
It added that sustained momentum in the services sector, continued government infrastructure spending, stable employment conditions and healthy credit growth are expected to support domestic demand in the coming months.
The RBI said these factors reaffirm India’s position as the world’s fastest-growing major economy.
El Niño remains a concern for agriculture
The central bank cautioned that deficient and uneven south-west monsoon conditions associated with El Niño could pose risks to agriculture and rural demand.
However, it said government initiatives such as crop diversification, climate-resilient farming, water harvesting and conservation measures are expected to help reduce the impact.
When is the next RBI MPC meeting?
The RBI said the minutes of the August 2026 MPC meeting will be published on 19 August 2026.
The next Monetary Policy Committee meeting is scheduled to be held from 5 to 7 October 2026, when policymakers will once again assess inflation, economic growth and global developments before deciding the future course of interest rates.