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RBI Monetary Policy Review - August 2026

MPC resists “peer pressure”, maintains neutral hold
11 August 2026
    Local Market Commentary
    Download the full reportPDF, 390.44KB

    RBI Monetary Policy Review - August 2026

    The MPC in a unanimous vote decided to maintain a pause on the Repo Rate at 5.25 per cent while maintaining a neutral stance.

    • The RBI MPC delivered a neutral hold, but the communication has dovish undertones because it sees inflation pressures as mainly supply-driven and not broad-based, with benign core-core inflation and FY27 CPI revised down ~10bps to 5.0 per cent, with inflation expected to peak at 5.9 per cent in Q3 FY27 and then ease to 5.3 per cent in Q1 FY28. That said, the path to any policy pivot is expected to remain calibrated and highly data-dependent, with West Asia conflict and weather risks (El Niño/monsoon) and US Fed actions key swing factors. While a rate hike in the latter half of FY27 is possible, the timing is unclear as the policy pivot is highly data sensitive.

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