RBI keeps interest rates unchanged

TBS Report

05 August, 2026, 01:50 pm

Last modified: 05 August, 2026, 01:53 pm

The Reserve Bank of India today kept key interest rates unchanged for the third time in a row as it weighed the impact of uncertain energy prices and supply disruptions caused by the ongoing West Asia crisis.

Announcing the third bi-monthly monetary policy for the current fiscal, RBI Governor Sanjay Malhotra said the Monetary Policy Committee (MPC) has unanimously decided to retain the short-term lending rate, or repo rate, at 5.25% with a neutral stance.

The interest rate pause came even as the Consumer Price Index (CPI)-based headline retail inflation crossed the RBI’s medium-term target of 4%, reaching 4.38% in June.

However, RBI marginally raised the growth forecast to 6.7% while lowering the inflation projection to 5% for the current fiscal.

Additionally, the Indian rupee has been depreciating continuously against the US dollar since the beginning of this year, hovering between 95 and 96 against the greenback.

Once considered among Asia’s more stable currencies, the rupee has now become one of the worst-performing emerging market currencies this year, pressured by a mix of expensive oil, capital outflows, widening trade deficits and a surging US dollar.

It has depreciated about 7% so far in 2026 and is down roughly 6% since the outbreak of the Iran conflict in late February.