RBI MPC meeting: Will repo rate change on August 5? Experts explain what to expect

The three-day meeting of the Reserve Bank of India's rate-setting panel started on August 3, amid expectations of a status quo on the repo rate. RBI Governor Sanjay Malhotra will announce the outcome of the bi-monthly meeting on August 5, Wednesday.

Madan Sabnavis, Chief Economist, Bank of Baroda, said the credit policy comes at a time when global uncertainty still exists and there is little clarity on when the war will end.

"Growth on the other hand, going by high frequency indicators, is steady. Against this background, the MPC is likely to maintain status quo on repo rate as well as the stance," Sabnavis said.

“The stability in India’s 10-year government bond yield at around 6.7% also indicates that bond traders are not pricing in an immediate change in interest rates. Market attention will therefore be focused more on the RBI’s commentary than on the policy decision itself, particularly its assessment of inflation risks, liquidity conditions and the external environment. A steady policy stance would provide continuity for the bond market, although global developments could continue to influence yields in the near term. The RBI is likely to retain a data-dependent approach, balancing domestic growth conditions with potential inflationary pressures arising from geopolitical uncertainty and fluctuations in global energy prices,” said Vineet Agrawal, co-founder of Jiraaf- Sebi-registered Online bond platform (OBPP).

“We expect the MPC to maintain the policy rate at its current level, balancing growth with macroeconomic stability amid an evolving global environment. While another repo rate cut would further improve housing affordability and support buyer sentiment, particularly in the mid-income and affordable segments, preserving policy stability remains equally important. A stable interest rate environment also provides developers with greater planning certainty and supports sustained investment across the real estate value chain," said Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India.

Dipti Deshpande, Senior Director and Principal Economist, Crisil Ltd, too expects the central bank to keep policy rates unchanged during its August review meeting.

In June, the Reserve Bank had kept its key policy rate unchanged at 5.25 per cent and adopted a cautious wait-and-watch stance as policymakers assessed the fallout of the West Asia conflict.