Reserve Bank of India's Monetary Policy Committee Is Widely Expected to Keep the Repo Rate Unchanged at 5.25% and Retain Its Neutral Stance

Almost all of the 30 economists surveyed by Bloomberg forecast a hold, with only Capital Economics' Shilan Shah calling for a 25-basis-point increase. The cautious approach comes amid rising inflation, which crossed 4% in June, and ongoing global uncertainties, even as domestic growth remains reasonably resilient. Domestic conditions, rather than global monetary developments, are expected to guide the decision.

The repo rate has been unchanged in the last three MPC meets, and the neutral stance has been maintained since June 2025 across seven meetings. Recent decisions include a 25-basis-point cut in February 2025 to 6.25%, a 25-basis-point cut in April 2025 to 6.00%, a 50-basis-point cut in June 2025 to 5.50%, and a 25-basis-point cut in December 2025 to 5.25%. India's CPI inflation is projected to average 5% in FY27, supported by a stable rupee and RBI policy.

A brokerage warns inflation may exceed the RBI's 6% target in the second half of FY27 due to El Nino and geopolitical supply-chain disruptions. Policymakers are walking a tightrope between upside risks to inflation from higher energy costs linked to the West Asia conflict and downside risks to growth. Governor Malhotra emphasises commitment to financial stability, prioritising price stability while supporting economic growth amidst inflation risks.