The Reserve Bank of India’s Monetary Policy Committee (MPC), chaired by Governor Sanjay Malhotra, on Wednesday kept the benchmark repo rate unchanged at 5.25 per cent, opting for policy continuity as it assessed the evolving domestic and global macroeconomic environment.
The decision, announced at the conclusion of the MPC's three-day meeting, marks another pause after the committee also left key interest rates unchanged in its June 2026 policy review.
The decision, announced after the MPC's 62nd meeting, held between August 3 and August 5, marks another policy pause following the June review. The six-member committee, comprising Governor Malhotra, Dr Nagesh Kumar, Shri Saugata Bhattacharya, Prof. Ram Singh, Dr Poonam Gupta and Shri Indranil Bhattacharyya, unanimously deliberated on the interest rate decision.
SDF, MSF, And Bank Rate
The MPC also retained its 'Neutral' policy stance, signalling that it remains focused on balancing inflation management with the need to support economic growth.
Following the decision, the Standing Deposit Facility (SDF) rate remains at 5 per cent, while the Marginal Standing Facility (MSF) rate and the Bank Rate continue at 5.5 per cent.
Global Risks Continue To Shape Policy Outlook
Explaining the rationale behind the decision, the RBI said the global economic landscape remains uncertain, with 2026 witnessing sharp swings in financial markets, persistent inflation concerns and rapidly changing policy expectations across major economies.
The central bank noted that optimism following the temporary ceasefire in West Asia faded after hostilities resumed in July, reviving concerns over energy supplies and geopolitical stability. At the same time, sticky inflation has prompted several global central banks to tighten monetary policy further, while others have remained cautious in the face of continuing price pressures.
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According to the RBI, a stronger US dollar, elevated bond yields and a hawkish policy stance by the US Federal Reserve have added to global financial market volatility. Investors have also continued to reassess their exposure to technology and artificial intelligence-related stocks, contributing to fluctuations in global equity markets.
The central bank said geopolitical tensions, volatile crude oil prices, persistent inflation expectations and weak public finances in several advanced economies continue to pose downside risks to the global growth outlook.
Domestic Economy Shows Resilience
Despite these global headwinds, the RBI said the Indian economy has continued to demonstrate resilience.
High-frequency economic indicators available for the first quarter of FY27 point to steady domestic demand, supported by robust private consumption and sustained investment activity. Indicators linked to construction, capital goods production and bank credit suggest that investment momentum has remained intact.
The central bank also highlighted that external demand has held up well, with healthy growth in services exports accompanied by a recovery in merchandise exports, providing additional support to economic activity.
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Energy Prices, Supply Chains Remain Key Risks
While domestic fundamentals remain favourable, the RBI cautioned that global developments could still influence India's economic outlook.
It noted that elevated energy prices and continuing supply chain pressures remain significant sources of uncertainty. These factors, along with geopolitical developments, will continue to be closely monitored by policymakers while calibrating future monetary policy decisions.