RBI MPC meeting August 2026: The Reserve Bank of India (RBI) on Wednesday, 5 August, announced a status quo on benchmark interest rates and maintained a ‘neutral’ policy stance, in line with market expectations. The central bank said the Indian economy performed better than expected, even as headline CPI inflation inched up in Q1FY27 amid global challenges.
The RBI Governor Sanjay Malhotra-led Monetary Policy Committee (MPC) decided to keep the policy repo rate unchanged at 5.25% and maintain a ‘neutral’ stance in its August 2026 policy meeting.
“The MPC voted unanimously to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 5.25%. Consequently, the standing deposit facility (SDF) rate remains at 5%, and the marginal standing facility (MSF) rate and the Bank Rate remain at 5.50%. The MPC also decided to continue with the neutral stance,” said the monetary policy statement.
RBI MPC key highlights:
1. Inflation to stay at 5% in FY27
RBI revised FY27 CPI inflation forecast to 5% from 5.1% earlier, with Q2FY27 estimates reduced to 4.7% from 5.1% earlier, Q3FY27 estimates maintained at 5.9%, and Q4FY27 estimates slightly raised to 5.5% from 5.4% earlier. The RBI expects Q1FY28 inflation at 5.3%.
Core inflation, which excludes volatile energy and food prices, is projected at 4.3% FY27. Core inflation, excluding precious metals, is expected to be lower in the near term, suggesting that demand pressures remain contained, said the RBI.
2. Growth estimates increased slightly
The RBI expects India’s GDP to grow by 6.7% in FY27. The revised estimates are 10 basis points higher than the previous projection of 6.6%, with Q1 at 7% (from 6.6% projected in June), Q2 at 6.4% (from 6.3% projected in June), Q3 unchanged at 6.5%, and Q4 unchanged at 6.8%. Real GDP growth for Q1FY28 is projected at 7.3%.
The MPC underscored that the Indian economy has remained resilient amidst persisting global headwinds.
“High frequency indicators available so far point towards steady domestic demand in Q1FY27. Private consumption remained robust. Investment continues to be resilient, as suggested by various indicators related to construction, capital goods and bank credit. External demand also sustained, as healthy expansion in services exports was complemented by a rebound in merchandise exports,” said the MPC.
3. Financial stability condition
RBI Governor said the financial parameters, such as capital adequacy, liquidity, asset quality and profitability of scheduled commercial banks (SCBs) continue to remain healthy. However, there is some moderation in the net interest margin (NIM) of commercial banks as compared to the last year.
The system-level parameters of NBFCs, too, are sound, with adequate capital position, improved GNPA ratios and higher profitability, said the governor.
4. Foreign capital flows
The RBI Governor highlighted that the gross foreign direct investment (FDI) inflows stood buoyant at $30.7 billion in Q1FY27, higher than $26.7billion a year ago, reflecting the continued interest of global investors in India.
Net FDI inflows, driven by higher gross inflows and a slowdown in the growth of outward FDI, also increased during the period.
Foreign portfolio investment (FPI) to India witnessed a turnaround during June-July 2026 with net inflows of $7.1 billion, primarily driven by the debt segment, after registering net outflows during April-May 2026, said the RBI.
5. Additional measures
The RBI is issuing draft guidelines for resuming licensing of UCBs (urban cooperative banks).
Moreover, the central bank said it is issuing draft directions following a comprehensive review of the arrangement and drawing on experience from developments since 2008, when the Credit Monitoring Arrangement for Rural Cooperative Banks was last revised.
Also, the RBI proposed harmonising and standardising the regulatory framework for interest rates on advances across all regulated entities to enhance transparency in lending rates and strengthen consumer protection.
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