Industry Odisha Bureau, Aug 6: Citing global uncertainties as well as maintaining a neutral stance, the Reserve Bank of India (RBI) yesterday reportedly kept the repo rate unchamged at 5.25% for the fourth time at its significant six-member Monetray Policy Committee (MPC) meeting.
Addressing a press conference soon after announcing the monetary policy, RBI Governor Sanjay Malhotra reportedly said that, “There is a need for greater clarity to emerge, especially regarding inflation, its path and composition before taking any policy action”.
As per media reports, “RBI had cut the repo rate by a total 125 basis points (bps), with the last reduction of 25 bps in December to 5.25% last year (2025), and it has been on pause so far in 2026.”
Media reports added that, “The six-member RBI’s MPC meeting yesterday (August 5) also had its growth forecast at 6.7% for the fiscal year 2026-27 (FY27), i.e. up from 6.6% projected in RBI’s June policy in the current year. Similarly, the six-member RBI’s MPC meeting yesterday (August 5) also estimated its retail inflation/Consumer Price Index (CPI) at 5.0% for the fiscal year 2026-27 (FY27), i.e. down from 5.1% estimated earlier.”
Notably, “The repo rate is the interest rate at which the RBI lends short-term funds to commercial banks, usually against government securities, to manage liquidity and control inflation. In short, the repo rate is also called ‘repurcharge rate’ at which commercial banks borrow money from the RBI by pledging government securities as collateral. Essentially, banks sell these securities to the RBI with an agreement to repurchase them at a later date at a slightly higher price. The difference in price represents the interest, which is the repo rate. This mechanism allows banks to meet short-term funding needs and maintain liquidity in the financial system.”
