Archive · 9 Aug 2026
RBI Holds Repo Rate, Lifts Growth Outlook to 6.7%
The Reserve Bank of India is like a grown-up in charge of money for the whole country.
It recently made a big announcement about its plan for money.
It decided to keep the interest rate it charges banks the same.
This rate, called the repo rate, stayed at 5.25 percent.
The bank also said it thinks India's economy will grow a little faster than it thought before, now expecting growth of 6.7 percent.
At the same time, it thinks prices of things will not go up as fast as before, lowering its forecast to 5 percent.
Even so, prices are still expected to rise a bit more than the bank would like in the coming months.
Many experts believe the bank will raise interest rates two times in the future, possibly starting in December.
This matters because higher rates can change how much people pay to borrow money.
The RBI left the repo rate unchanged at 5.25% and kept its monetary policy stance neutral.
The central bank raised its GDP growth forecast for the year from 6.6% to 6.7%.
It trimmed its inflation forecast from 5.1% to 5%, though quarterly projections for the next three quarters remain above 5%.
Market indicators point to two likely rate hikes, with December seen as a probable time for the first.
The RBI clarified it has no plans to close the FCNR scheme early, after it attracted about $40 billion in its first two months.
- Who
- The Reserve Bank of India (RBI), with analysis from the Chief Economist of Bank of Baroda.
- What
- The RBI kept the repo rate unchanged at 5.25% with a neutral stance, revised its GDP growth forecast up to 6.7%, and lowered its inflation forecast to 5%.
- When
- Not explicitly dated in the article; the policy follows the RBI's projections from June, with the FCNR scheme referenced as running until September.
- Where
- India
- Why
- To balance growth and inflation amid global uncertainty, while the analysis argues future rate hikes are needed as inflation is expected to stay above 5%.
Hold Rates for Now
Raise Rates Soon
Timing of a rate hike
Hold Rates for Now
The RBI kept the repo rate unchanged at 5.25% with a neutral stance, signaling current conditions do not yet warrant immediate monetary action.
Raise Rates Soon
The analysis argues a rate hike is 'very much in order' because with inflation averaging 5.5% for nine months, real returns turn negative for the banking system and deposits may move to markets.
The FCNR scheme's future
Hold Rates for Now
The market speculated that the RBI might close the FCNR scheme before September due to very strong dollar inflows of around $40 billion in two months.
Raise Rates Soon
The RBI subsequently clarified that it had no intentions of a premature closing to the FCNR scheme.
- Repo rate
- 5.25% (kept unchanged)
- Policy stance
- Neutral
- GDP growth forecast
- 6.7% (revised up from 6.6%)
- Inflation forecast
- 5% (revised down from 5.1%)
- Q3 inflation forecast
- 5.9%
- FCNR scheme flows
- Around $40 billion in the first two months
- Expected surplus dollars
- $60-80 billion (market estimates)
- Expected rate hikes
- Two, per market indicators