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RBI Policy: Stability in interest rates re-assured

ICICIdirect Research 07 Aug 2026 DISCLAIMER

RBI kept the repo rate unchanged at 5.25% and maintained a neutral stance during its August 2026 meeting as was widely expected and turned out to be non-event.
RBI raised GDP forecast by 10bps to 6.7% for FY27 while lowered inflation by 10bps to 5.0%.
Concern over food inflation (5.3% vs headline CPI of 4.4%) which is far higher than overall inflation, has reduced significantly as monsoon deficit has now narrowed to about 11% in early August 2026, recovering from a severe shortage earlier.
Major takeaway: RBI Governor states that higher inflation is mostly on account of fuel and food, with little signs of generalisation of price pressures so far. Rate hike if any is still few policy meetings away particularly given fall in crude oil prices and improved monsoon.
Bond markets are likely to continue to be driven by movement in global oil prices and global bond yields. No near-term rate hike concern augurs well for equity markets in general.

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