RBI MPC meeting begins today; Rate pause likely as policymakers balance inflation risks and growth concerns

The RBI’s Monetary Policy Committee (MPC) kicks off its three‑day policy session on Monday, and most market observers anticipate that the central bank will hold the benchmark repo rate steady, staying cautious as domestic inflation trends and global uncertainties shift.

Analysts and market specialists think the RBI will avoid making hasty interest‑rate moves, even though global pressures remain, such as high crude oil prices and a comparatively aggressive U.S. Federal Reserve.

Rather, the central bank is likely to concentrate on domestic inflation, liquidity, and growth, keeping a watchful eye on external factors.

Vinay Pai, Managing Director and Head of Fixed Income at Equirus Capital, noted that the RBI’s policy choices will be guided mainly by domestic macroeconomic factors instead of closely following global monetary policy.

“The forthcoming monetary policy will be chiefly shaped by domestic inflation, liquidity, and growth, not by mimicking global monetary policy shifts,” Pai stated.

He observed that the Fed’s hawkish approach has lifted U.S. Treasury yields, shrinking the yield gap between Indian and U.S. bonds.

Although the short‑term effect on domestic bond markets has been modest, sustained high global yields might curb foreign portfolio inflows into Indian debt and place slight upward pressure on government bond yields.

Pai added that should global yields stay high and debt inflows falter, the RBI is expected to keep a neutral, cautious stance rather than cut rates sharply.

He further said the central bank must secure sufficient domestic and foreign‑currency liquidity via suitable actions to preserve orderly market conditions.

Mandar Pitale, Head of Financial Markets at SBM Bank (India) Ltd., remarked that the policy review unfolds amid higher crude oil prices sparked by the Iran conflict, which has raised inflation risks but is still under control for the moment.

“Current growth‑inflation trends suggest growth risks paired with a controllable inflation path in the near term. Combined with heightened global uncertainties, this could lead the MPC to postpone any talk of a rate hike at the upcoming August meeting,” Pitale said.

He added that the MPC is likely to issue cautious guidance, with global oil prices and monsoon progress staying pivotal for future policy moves.

However, he cautioned that should crude oil prices linger in the $90‑$100 per barrel bracket for an extended time, inflationary pressures could rise, strengthening the argument for rate hikes in the second half of the fiscal year.

Echoing similar views, Maulik Patel, Head of Research at Equirus Securities, said the MPC is anticipated to leave policy rates unchanged at the August meeting.

“We anticipate the MPC will hold policy rates steady in the August meeting. We observe a rise in wholesale and retail inflation driven by higher petrol and diesel pump prices, secondary effects, and food‑price impacts from weather disturbances. Full‑year CPI is projected at 4.9 % because of these pressures, with upside risks,” Patel said.

He also highlighted tightening monetary conditions in advanced economies, noting that recent signals from the U.S. Federal Reserve have raised expectations of another rate hike later this year.

Patel said these global developments will stay a key factor for the RBI when deciding on the timing of any future policy move, adding that Equirus Securities forecasts a 25‑basis‑point rate hike in the December policy review.

At the time of reporting, Brent crude hovered near $83.90 per barrel, and crude oil traded around USD 80.15 per barrel.

Published on August 3, 2026