{"id":117458,"date":"2026-08-06T11:56:50","date_gmt":"2026-08-06T06:26:50","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=117458"},"modified":"2026-08-06T12:00:52","modified_gmt":"2026-08-06T06:30:52","slug":"monetary-policy-committee-mpc-rbi-keeps-repo-rate-unchanged","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/monetary-policy-committee-mpc-rbi-keeps-repo-rate-unchanged\/","title":{"rendered":"Monetary Policy Committee (MPC) &#8211; RBI Keeps Repo Rate Unchanged Amid Global Uncertainty"},"content":{"rendered":"<h2 style=\"text-align: justify;\"><b>Monetary Policy Committee (MPC) Latest News<\/b><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Monetary Policy Committee (<\/span><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/what-is-the-monetary-policy-committee-mpc\/\" target=\"_blank\"><b>MPC<\/b><\/a><span style=\"font-weight: 400;\">) of the Reserve Bank of India (RBI), chaired by Governor Sanjay Malhotra, has kept the repo rate unchanged at <\/span><b>5.25%<\/b><span style=\"font-weight: 400;\"> and retained a neutral monetary policy stance.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">While GDP growth projection for FY2026-27 has been revised upward to 6.7% (from 6.6%), the inflation forecast has been lowered to 5.0% (from 5.1%).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This <\/span><b>reflects confidence <\/b><span style=\"font-weight: 400;\">in domestic resilience despite heightened geopolitical and global economic risks.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Key Monetary Policy Decisions<\/b><\/h2>\n<ul>\n<li><b>Status quo on repo rate:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Repo rate retained at 5.25%, indicating that the policy stance continues to remain neutral.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Interest rates on home loans, gold loans, deposits and savings accounts are expected to remain broadly unchanged unless banks independently revise them.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Revised macro projections (FY2026-27):<\/b>\n<ul>\n<li><b>Real GDP growth<\/b><span style=\"font-weight: 400;\">: Previous forecast was 6.6%, while the revised forecast is 6.7%.<\/span><\/li>\n<li><b>CPI inflation<\/b><span style=\"font-weight: 400;\">: Previous forecast was 5.1%, while the revised forecast is 5.0%.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Why did the MPC Maintain Status Quo?<\/b><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The MPC refrained from altering policy rates due to elevated global <\/span><b>uncertainties<\/b><span style=\"font-weight: 400;\">, particularly &#8211;<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Escalating conflict in West Asia, causing volatility in crude oil prices.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Risks to global supply chains and international trade.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Uncertainty surrounding the South-West Monsoon and possible El Ni\u00f1o conditions.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Persistent geopolitical tensions and evolving global trade policies.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Given India&#8217;s dependence on imported crude oil, higher energy prices pose significant inflationary risks.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The RBI chose to prioritise <\/span><b>stability <\/b><span style=\"font-weight: 400;\">until the inflation outlook becomes clearer.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Inflation Outlook:<\/b><\/h2>\n<ul>\n<li><b>Current inflation trends:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Retail inflation (CPI) rose to 4.38% in June, crossing the RBI&#8217;s 4% target for the first time in 17 months.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Inflationary pressures are primarily driven by the <\/span><b>food<\/b><span style=\"font-weight: 400;\"> and <\/span><b>fuel <\/b><span style=\"font-weight: 400;\">prices.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Core inflation<\/span> <span style=\"font-weight: 400;\">remains relatively moderate, indicating limited demand-side pressures.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>RBI&#8217;s inflation assessment:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Inflation is expected to rise during Q3 FY27 due mainly to food and fuel, while moderates thereafter as supply conditions improve.<\/span><\/li>\n<li><b>Projected CPI inflation<\/b><span style=\"font-weight: 400;\">: 4.7% in Q2, 5.9% (Q3), 5.5% (Q4), and 5.3% in Q1 FY28.<\/span><\/li>\n<li><b>Core inflation for FY27<\/b><span style=\"font-weight: 400;\">: Projected at 4.3%.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Key concern: <\/b><span style=\"font-weight: 400;\">The RBI remains alert to the possibility of second-round effects, where higher food and fuel prices translate into widespread inflation across sectors.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Growth Outlook<\/b><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Despite global headwinds, domestic economic activity has shown resilience.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Reasons for improved growth projection: <\/b><span style=\"font-weight: 400;\">Strong high-frequency economic indicators during Q1, improvement in domestic demand conditions, and partial easing of earlier supply disruptions.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">However, growth remains vulnerable to global trade slowdown, elevated crude oil prices, geopolitical instability, and adverse weather conditions affecting agriculture.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>External Sector Concerns<\/b><\/h2>\n<ul>\n<li><span style=\"font-weight: 400;\">The RBI highlighted several emerging external risks.\u00a0<\/span><\/li>\n<li><span style=\"font-weight: 400;\">For example,<\/span>\n<ul>\n<li><b>Current account deficit (CAD): <\/b><span style=\"font-weight: 400;\">Upside risks arise from rising energy import bill, slowing global trade, and persistent trade policy uncertainties.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Exchange rate policy:\u00a0<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">The RBI reiterated that the rupee will remain market-determined.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Intervention will be limited to prevent excessive volatility, curb speculative activity, and avoid disorderly market movements.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Global Context and Major Risks Identified by RBI<\/b><\/h2>\n<ul>\n<li><b>Global context:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">The US Federal Reserve also maintained its Federal Funds Rate at 3.50\u20133.75%, reflecting similar concerns over <\/span><b>inflation <\/b><span style=\"font-weight: 400;\">persistence and global uncertainty.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><span style=\"font-weight: 400;\">International monetary authorities continue to adopt a <\/span><b>cautious <\/b><span style=\"font-weight: 400;\">approach amid geopolitical tensions and inflationary pressures.<\/span><\/li>\n<li><b>Risks: <\/b><span style=\"font-weight: 400;\">West Asia conflict and volatile crude oil prices, <\/span><b>supply-chain disruptions<\/b><span style=\"font-weight: 400;\">, global trade uncertainty, south-west monsoon performance and El Ni\u00f1o risks, and potential spillover of food and fuel inflation into broader price levels.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Conclusion<\/b><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The RBI has adopted a <\/span><b>wait-and-watch<\/b><span style=\"font-weight: 400;\"> approach, balancing inflation control with support for economic growth amid an uncertain global environment.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Going forward, prudent monetary policy, stable energy supplies, resilient supply chains, and favourable monsoon conditions will be critical for maintaining macroeconomic stability.<\/span><\/li>\n<\/ul>\n<p style=\"text-align: justify;\"><b>Source: <\/b><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-economics\/rbi-repo-rate-unchanged-mpc-policy-fy27-gdp-inflation-10818505\/\" target=\"_blank\" rel=\"nofollow noopener\"><b>IE<\/b><\/a><b>\u00a0| <\/b><a href=\"https:\/\/indianexpress.com\/article\/business\/reserve-bank-india-monetary-policy-august-2026-repo-rate-unchanged-sanjay-malhotra-10819438\/\" target=\"_blank\" rel=\"nofollow noopener\"><b>IE<\/b><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Monetary Policy Committee (MPC) of the RBI, chaired by Governor Sanjay Malhotra, has kept the repo rate unchanged at 5.25% and retained a neutral monetary policy stance.<\/p>\n","protected":false},"author":19,"featured_media":117476,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[2335],"class_list":["post-117458","post","type-post","status-publish","format-standard","has-post-thumbnail","category-upsc-mains-current-affairs","tag-monetary-policy-committee","no-featured-image-padding"],"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/117458","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/19"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=117458"}],"version-history":[{"count":4,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/117458\/revisions"}],"predecessor-version":[{"id":117494,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/117458\/revisions\/117494"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/117476"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=117458"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=117458"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=117458"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}