The Reserve Bank of India is expected to maintain its benchmark repo rate at 5.25% throughout 2026, as concerns over economic growth slowdown are expected to outweigh inflationary pressures, according to a Reuters poll of economists.
The survey conducted between July 21 and July 27 showed that 68 out of 72 economists expected the RBI to keep the policy rate unchanged at its upcoming meeting and through the rest of the year. Only a small number of economists anticipated a rate hike.
The expectations mark a shift from earlier forecasts, where economists had anticipated possible monetary tightening due to inflation concerns. However, weaker growth expectations have reduced the likelihood of an immediate rate increase.
India’s retail inflation increased to 4.38% in June 2026, moving above the RBI’s medium-term inflation target of 4%. Rising global oil prices, currency depreciation and geopolitical uncertainty have contributed to concerns about future inflation risks.
Despite these pressures, economists believe the central bank may prioritise economic growth by maintaining stable interest rates. Higher borrowing costs could affect consumer demand, business investment and overall economic activity.
India’s economic growth is expected to moderate to around 6.6% in the current financial year, compared with 7.7% in the previous year. This slowdown has strengthened expectations that the RBI will avoid further monetary tightening.
The rupee’s weakness has also created challenges for policymakers. However, economists expect the RBI to manage currency pressures through foreign exchange interventions, liquidity measures and steps to attract overseas capital rather than using interest rates primarily for currency support.
The central bank faces the task of balancing multiple objectives, including controlling inflation, supporting growth, maintaining currency stability and ensuring financial market confidence.
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