Analysts at Commerzbank anticipate the Reserve Bank of India (RBI) will keep its benchmark repurchase rate unchanged at 5.25% at its upcoming meeting on August 5. This decision comes even as inflation risks persist, driven by elevated global commodity prices and a less-than-ideal monsoon. However, the June Consumer Price Index (CPI) reading of 4.4% year-on-year falls within the RBI's target range of 2-6%, supporting the case for policy continuity.
In addition to the repo rate, the RBI is also expected to leave the Standing Deposit Facility (SDF) and Marginal Standing Facility (MSF) rates unchanged at 5% and 5.5%, respectively. RBI Governor Sanjay Malhotra emphasized a data-dependent approach, stating it's "prudent to wait for greater clarity to emerge." A Reuters poll further reinforces this outlook, with 68 out of 72 economists expecting policy rates to remain at their current levels.
The RBI previously lowered its real Gross Domestic Product (GDP) growth forecast for the current year to 6.6% from an earlier projection of 6.9%. In its June policy meeting, the central bank also raised its inflation forecast for FY26-27 to 5.1% year-on-year from 4.6%, citing upward pressure from higher input prices for base metals, plastic, rubber, and rising commercial Liquefied Petroleum Gas (LPG) prices. So far this year, the RBI has maintained the status quo at all three policy meetings.
