Analysts expect RBI to hold interest rates as inflation stays within target — no change expected in monetary policy review
Sanjay MalhotraReserve Bank of India

Analysts expect RBI to hold interest rates as inflation stays within target — no change expected in monetary policy review

Analysts predict the Reserve Bank of India will maintain key interest rates during its August 4 review, as inflation remains within the target range. Retail inflation stood at 4.38% in June, supported by public sector oil firms absorbing price increases, promoting economic growth while ensuring price stability.

Telangana Today Telangana Today4 August 2026 · 10:55 UTC
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Analysts expect the Reserve Bank of India (RBI) to keep key interest rates unchanged during its monetary policy review on August 4, focusing on economic growth as inflation remains manageable.12

Currently, the country’s Consumer Price Index (CPI) inflation is well within the RBI’s tolerance band of 2 to 6 percent, with a target midpoint of 4 percent to ensure growth alongside price stability.

Retail inflation was recorded at 4.38 percent in June, primarily influenced by global oil prices, although public sector oil companies have absorbed much of the cost increase to protect consumers.

RBI Governor Sanjay Malhotra has indicated that any interest rate hikes would only occur if inflationary pressures become more widespread rather than driven by temporary supply shocks.

The RBI's economic forecast suggests retail inflation could reach 5.1 percent for the fiscal year ending March 31, 2027, with growth projected at 6.6 percent. These forecasts assume crude oil prices will average around $95 a barrel, a level currently not being met as India has secured over 50 percent of its crude oil from Russia at discounted rates.345

Additionally, measures such as eliminating capital-gains tax for foreign holders of Indian government bonds have attracted nearly $40 billion in foreign exchange inflows, aiding in stabilizing the rupee.89

Key Insight
“RBI's June forecast sees retail inflation at 5.1% and growth at 6.6% for fiscal 2027, based on crude averaging about $95 a barrel. India imported more than 50% of its crude from Russia in July and public-sector oil firms sourced over 70% of LPG imports from the US, helping keep prices manageable.”
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Telangana TodayTelangana Today
“The Reserve Bank of India (RBI) is expected to keep key interest rates unchanged in its August 4 monetary policy review, prioritising economic growth as inflation remains within the tolerance band.”
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EARLIER IN THE STORY:
RBI holds fire as inflation concerns temper hopes of another cut; repo rate seen steady at 5.25% when MPC announces decision August 5
Telegraph India
RBI holds fire as inflation concerns temper hopes of another cut; repo rate seen steady at 5.25% when MPC announces decision August 5

The Reserve Bank of India (RBI) is expected to keep the repo rate unchanged at 5.25 per cent during its meeting on August 5.

Bank Of BarodaCitigroupCore Inflation
2026-08-04
TL;DR by CuriousCats.ai
  • The Reserve Bank of India’s (RBI) three-day monetary policy meeting began on Monday, with economists expecting the central bank to keep the benchmark repo rate unchanged at 5.25 per cent when the Monetary Policy Committee (MPC) announces its decision on August 5.
  • The six-member panel is widely expected to maintain a pause after holding rates steady in June, as policymakers weigh persistent inflationary pressures against resilient domestic growth amid heightened global uncertainty.
  • After the RBI’s June review, the inflation trajectory turned less favourable: retail inflation accelerated to 4.38 per cent in June, breaching the RBI’s medium-term target of 4 per cent for the first time in 17 months, while core inflation remained broadly contained at around 4 per cent.
  • The RBI revised its FY27 inflation projection upward to 5.1 per cent from 4.6 per cent, and trimmed its gross domestic product (GDP) growth forecast for FY27 to 6.6 per cent from 6.9 per cent.
  • Samiran Chakraborty, chief India economist at Citi, said a rate hike is unlikely in 2026 unless core inflation sustains above 4.5 per cent.
  • State Bank of India (SBI) group chief economic adviser Soumya Kanti Ghosh said consumer price index (CPI) inflation is likely to remain above 5 per cent for the next two quarters, so the RBI will likely maintain the status quo; however, an explicitly dovish message is less likely because of oil price volatility, rupee pressure, external-flow concerns and higher inflation projections.
Reserve Bank of India's Monetary Policy Committee begins its three-day meeting; expectations point to status quo on interest rates
Deccan HeraldDeccan Herald
Reserve Bank of India's Monetary Policy Committee begins its three-day meeting; expectations point to status quo on interest rates

The Reserve Bank of India's Monetary Policy Committee (MPC) began its three-day meeting on Monday.

Bank Of BarodaCautious ApproachCrisil Ltd
2026-08-03
TL;DR by CuriousCats.ai
  • The Reserve Bank of India's rate-setting panel began its three-day meeting on Monday, with the Monetary Policy Committee (MPC) slated to announce its decision on August 5; RBI Governor Sanjay Malhotra will announce the outcome.
  • Amid global uncertainties and inflation risks, most experts expect the six-member MPC to adopt a cautious approach despite resilient domestic economic growth.
  • Madan Sabnavis, Chief Economist at Bank of Baroda, expects the MPC to maintain status quo on repo rate as well as the stance, citing rising inflation and steady growth.
  • Dipti Deshpande, Senior Director and Principal Economist at Crisil, expects rates unchanged and the MPC to wait for clarity on West Asia and monsoon uncertainties.
  • D K Srivastav of EY India expects the repo rate to stay unchanged at 5.25 per cent in the August 2026 review and says RBI decisions will remain data-dependent amid crude oil uncertainty.
  • Vinay Pai of Equirus Capital says policy should be guided by domestic inflation, liquidity and growth; if elevated global yields persist, the RBI is likely to maintain a neutral and cautious stance rather than aggressively ease.
RBI MPC expected to keep rates on hold amid persisting supply shocks; India central bank diverges as global peers pivot to rate hikes
BusinessLineBusinessLine
RBI MPC expected to keep rates on hold amid persisting supply shocks; India central bank diverges as global peers pivot to rate hikes

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) will announce its next policy on August 5, 2026.

Axis BankCentral BankCitigroup
2026-08-03
TL;DR by CuriousCats.ai
  • The Monetary Policy Committee (MPC) of RBI is expected to keep interest rates unchanged this week, diverging from many global peers as inflation remains modest despite higher global oil prices.
  • Monetary policy remains weighed down by persisting supply shocks, with CPI headline inflation breaching the 4 per cent target in June.
  • 68 of 72 economists in a Reuters poll see RBI on hold, indicating a consensus on the central bank's decision amidst rising inflation expectations.
  • The WPI headline crossed 9 per cent in June 2026, indicating significant price pressures that could influence the RBI's policy decisions.
  • Despite the rise in inflation, core inflation has remained contained near 4%, providing the MPC with some leeway in its policy decisions.
  • The rupee's depreciation and rising crude prices have led to increased pressure on the RBI to consider rate hikes to defend the currency.
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