MPC Meeting August 2026: RBI Upgrades FY27 GDP Growth Outlook to 6.7%, Cuts Core Inflation Forecast to 4.3%

The Reserve Bank of India (RBI) on Wednesday, August 5, kept the benchmark repo rate unchanged at 5.25%, while retaining its neutral policy stance as policymakers weighed persistent geopolitical tensions in West Asia, elevated energy prices and continued uncertainty in the global economic environment.

The decision was announced after the three-day meeting of the third bi-monthly Monetary Policy Committee (MPC) for FY27, chaired by RBI Governor Sanjay Malhotra, which was held from August 3 to August 5.

RBI MPC Meeting August 2026: Repo Rate Unchanged at 5.25% for Fourth Straight Policy

With the latest decision, the RBI has now left the benchmark lending rate unchanged for the fourth consecutive monetary policy review, underscoring its cautious approach amid global uncertainties. The last revision to the repo rate came on December 5, 2025, when the central bank cut it by 25 basis points from 5.50% to 5.25%. Since then, the MPC has maintained the policy rate at the same level in every subsequent review.

RBI Increases FY27 GDP Growth Estimate to 6.7%; Q1 Outlook Raised to 7%

Alongside the policy decision, the central bank raised its FY27 GDP growth forecast to 6.7% from the earlier projection of 6.6%, reflecting confidence that resilient domestic demand will continue to support economic activity despite an increasingly uncertain global environment.

The RBI also revised its Q1 FY27 growth estimate to 7% from 6.6% and Q2 FY27 to 6.4% from 6.3%, while retaining its Q3 and Q4 growth projections at 6.5% and 6.8%, respectively.

RBI Cuts FY27 Core Inflation Projection from 4.7% to 4.3%

In a positive revision, the RBI has cut its FY27 core inflation forecast by 40 basis points to 4.3%, from the earlier estimate of 4.7%.

RBI Revises FY27 CPI Inflation Forecast Down to 5%; Q1 and Q2 Outlook Softened

The RBI also revised its headline Consumer Price Index (CPI) inflation projection for FY27 to 5.0%, 10 basis points lower than its previous estimate of 5.1%. On a quarterly basis, the inflation forecast for Q1 FY27 was reduced to 4.1% from 4.2%, while the Q2 estimate was cut to 4.7% from 5.1%. The Q3 projection was retained at 5.9%, whereas the Q4 forecast was marginally raised to 5.5% from 5.4%.

"The RBI's decision to maintain the repo rate while keeping its neutral stance was largely anticipated as inflationary pressures eased slightly and growth remained resilient. While oil prices have corrected, monsoon-related challenges remain a key risk for the inflation and are keenly eyed. The regulator has revised its inflation estimates marginally lower by to 5% vs 5.1% earlier, with core inflation revised downwards to 4.3% vs 4.7% earlier. Concurrently, growth estimates have been revised marginally higher to 6.7% for FY27 vs 6.6% earlier," said Dnyanada Vaidya, Research Analyst - BFSI, Axis Direct.

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