Mumbai, Aug 2: The Reserve Bank of India (RBI) is widely expected to keep the benchmark repo rate unchanged at its August monetary policy review, with economists predicting a cautious approach amid persistent inflation risks and global uncertainties.
A poll of 10 economists and treasury heads found that the central bank is likely to retain its ‘Neutral’ policy stance while maintaining a hawkish tone due to concerns over elevated crude oil prices, geopolitical tensions and an uneven monsoon.
Most experts believe the RBI will adopt a wait-and-watch approach as it assesses the evolving inflation outlook before considering any policy changes.
ICRA Chief Economist Aditi Nayar said subdued core inflation supports maintaining the current policy rate for now, while caution can be reflected through the central bank’s policy guidance.
RBI Governor Sanjay Malhotra has repeatedly stated that controlling inflation remains the central bank’s top priority, with the progress of the monsoon continuing to be a key factor in future policy decisions.
The RBI’s Monetary Policy Committee (MPC) is scheduled to meet from August 3 to August 5. Since last year, the central bank has reduced the repo rate by 1.25 percentage points to support economic growth.
Despite expectations of a pause this month, many economists believe the RBI could raise interest rates later in FY27 if inflationary pressures intensify.
Some experts also expect the central bank to closely monitor liquidity conditions through variable-rate repo auctions and open market operations while ensuring stability in the financial system.
Views on economic growth remain mixed, with some economists expecting stronger domestic demand to support growth, while others warn that global uncertainties, higher energy prices and geopolitical tensions could weigh on India’s economic outlook.
