RBI Monetary Policy Keeps Repo at 5.25

The Reserve Bank of India (RBI) Monetary Policy Committee (MPC) held its bi-monthly meeting from 3 August 2026 to 5 August 2026. On 5 August 2026, RBI Governor Sanjay Malhotra announced that the repo rate would remain unchanged at 5.25%, marking the fourth consecutive meeting at this level since December 2025.

Monetary Policy Committee

The Monetary Policy Committee is a six-member statutory body constituted under the Reserve Bank of India Act, 1934. It is responsible for fixing the policy repo rate, which is the rate at which the RBI lends short-term funds to commercial banks against government securities.

Policy Rates and Operating Framework

On 5 August 2026, the MPC retained the Standing Deposit Facility rate at 5% and the Marginal Standing Facility rate and bank rate at 5.5%. The policy stance was kept neutral, which is one of the standard stances used by the RBI in its monetary policy framework.

Inflation and Growth Projections

Retail inflation in India rose to 4.38% in June 2026, crossing the RBI’s 4% target for the first time in 17 months. Average inflation for Q1 FY27 stood at 3.9%, while the RBI’s inflation forecast for the quarter was 4.2%. The RBI retained its GDP growth forecast for FY27 at 6.6% on 5 August 2026.

Important Facts for Exams

• The RBI follows a flexible inflation targeting framework with a medium-term target of 4% Consumer Price Index inflation.
• The MPC consists of six members, including three members appointed by the Government of India and three members from the RBI.
• The repo rate is a key policy rate under the Liquidity Adjustment Facility of the RBI.
• The Standing Deposit Facility and Marginal Standing Facility are part of the RBI’s liquidity management corridor.

FCNR(B) and External Commercial Borrowing

Special relaxations under the FCNR(B) deposit framework and the External Commercial Borrowing framework had mobilised about USD 40.82 billion by 5 August 2026. The window for these relaxations remained open until 30 September 2026.