RBI MPC Meeting: The Reserve Bank of India (RBI)'s Monetary Policy Committee kept the repo rate unchanged at 5.25%, announced the RBI Governor Sanjay Malhotra, on Wednesday, August 5. The status quo move came after the completion of a three-day policy meeting which started earlier this week.
Meanwhile, the inflation surged above the central bank's medium-term target amid geopolitical uncertainties due to West Asia tensions and the weak global outlook. Considering the crude oil price volatility, there was a wider consensus that the RBI will keep the repo rate unchanged at 5.25% after its meeting in August.
Repo Rate And Inflation Concerns
The RBI MPC decided to keep the benchmark repo rate unchanged at 5.25% in its previous meeting as well as it maintained a cautious "wait and watch" approach while assessing the economic impact of rising geopolitical tensions in West Asia.
In-line with the MPC's revised inflation target for the year 2026, consumer price index (CPI) inflation inched higher in June. The CPI inflation, although, came within the RBI's tolerance band of 2% to 6%, price pressures have started to increase again. Retail inflation accelerated to 4.38% in June, which was its highest mark for the first time in several months and it moved above the RBI's medium-term target of 4%.
World Central Banks Raising Rates
Central banks of different countries across the world opted an hawkish stance and opted to increase rates. Whether it is Australia, Singapore, Europe, or Indonesia, central banks across the world opted to raise benchmark interest rates in recent months amid rising geopolitical uncertainty and inflation concerns.
US Fed Rate Stance
Last week, the US Federal Reserve announced its decision to keep the benchmark rates unchanged at a range of 3.5% to 3.75%. While market experts were anticipating the Federal Open Market Committee to keep the repo rate on hold, there are indications that the Fed will consider a rate hike this year.
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