RBI Seen Holding Repo Rate at 5.25% as Oil, Monsoon Risks Cloud Outlook

3 articles · Updated · linkedin · Aug 3

RBI’s six-member Monetary Policy Committee is expected to leave the repo rate unchanged at 5.25% this week, likely unanimously, while keeping its neutral stance and annual inflation and growth forecasts intact.
June CPI inflation rose to 4.38%—above the 4% target for the first time in 17 months—but analysts see no immediate need to tighten because Q1 inflation averaged 3.93% and industrial output accelerated 7.3%.
Brent crude has swung between $71.57 and $100.69 since the last policy meeting, while the monsoon outlook for August-September is below normal at under 94% of the long-period average, keeping food and imported inflation risks alive.
Market conditions have also shifted: the 10-year bond yield closed at 6.83% on Friday, the rupee at 95.39 per dollar, and RBI data showed $40.82 billion of inflows through its foreign-currency window.
That cautious stance mirrors other major central banks, with the Fed, ECB, BoE and BoJ all recently holding rates steady amid heightened uncertainty, even as some policymakers signaled a bias toward future tightening.