RBI to hold rates through 2026 as growth risks outweigh inflation

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The Reserve Bank of India will keep its key interest rate unchanged at 5.25% through the rest of the year and likely into early 2027, according to a Reuters poll of economists. Nearly 95% of respondents, 68 of 72, expect the Monetary Policy Committee to leave the repo rate steady at its August 3-5 meeting, a shift from a May poll that had forecast a rate hike next quarter. Economists cited the adverse impact of the Middle East war on growth and the view that rate hikes would be too costly, with inflation averaging 4.8% this fiscal year, below the RBI's 5.1% projection. The central bank is also under pressure from a rupee that has weakened nearly 7% against the dollar this year, but economists said it is unlikely to use interest rates to defend the currency.

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