The Crossbill News Desk
The Reserve Bank of India on Wednesday (August 5) left the policy repo rate unchanged at 5.25%, with Governor Sanjay Malhotra indicating that the central bank would adopt a cautious approach amid persistent domestic and global uncertainties.
Alongside the policy decision, the RBI revised its real Gross Domestic Product (GDP) growth forecast for 2026-27 downward to 6.7%.
Addressing the media while announcing the monetary policy, Malhotra said the central bank would wait for greater clarity before considering any change in its policy stance.
“The outlook, however, is hazy because of the uncertainties regarding the south-west monsoon, El Niño, geopolitics and global trade policy. There is a need for greater clarity to emerge, especially regarding inflation, its path and composition before taking any policy action,” Malhotra told The Indian Express, while unveiling the monetary policy of the central bank.
“Any such action (on the interest rate front) would also have to consider the need for recalibration of policy rates in line with the evolving growth-inflation dynamics, especially the normalisation of the underlying inflation from its benign levels seen hitherto,” he added.
Malhotra noted that economic growth is expected to moderate in 2026-27, pointing to renewed geopolitical tensions and their impact on the global economy. He said the renewed escalation of the conflict in West Asia since early July has increased volatility in energy prices while reviving concerns over disruptions to global supply chains.
“The Monetary Policy Committee underscored that it will maintain a close vigil and remain resolute in its commitment to align inflation with the target,” said Malhotra.
Even as the Monetary Policy Committee projected resilient domestic demand, recent RBI surveys indicated that consumer confidence in both rural and urban India has continued to weaken since the outbreak of the West Asia crisis.
The trend, reported by Hindustan Times, highlights growing caution among households despite the central bank's expectation of steady economic activity.
Alongside the policy decision, the RBI revised its real Gross Domestic Product (GDP) growth forecast for 2026-27 downward to 6.7%.
Addressing the media while announcing the monetary policy, Malhotra said the central bank would wait for greater clarity before considering any change in its policy stance.
“The outlook, however, is hazy because of the uncertainties regarding the south-west monsoon, El Niño, geopolitics and global trade policy. There is a need for greater clarity to emerge, especially regarding inflation, its path and composition before taking any policy action,” Malhotra told The Indian Express, while unveiling the monetary policy of the central bank.
“Any such action (on the interest rate front) would also have to consider the need for recalibration of policy rates in line with the evolving growth-inflation dynamics, especially the normalisation of the underlying inflation from its benign levels seen hitherto,” he added.
Malhotra noted that economic growth is expected to moderate in 2026-27, pointing to renewed geopolitical tensions and their impact on the global economy. He said the renewed escalation of the conflict in West Asia since early July has increased volatility in energy prices while reviving concerns over disruptions to global supply chains.
“The Monetary Policy Committee underscored that it will maintain a close vigil and remain resolute in its commitment to align inflation with the target,” said Malhotra.
Even as the Monetary Policy Committee projected resilient domestic demand, recent RBI surveys indicated that consumer confidence in both rural and urban India has continued to weaken since the outbreak of the West Asia crisis.
The trend, reported by Hindustan Times, highlights growing caution among households despite the central bank's expectation of steady economic activity.
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