New Delhi, August 5: The Reserve Bank of India (RBI) headed by Governor Sanjay Malhotra, has unanimously voted to keep the repo rate unchanged at 5.25% at its Monetary Policy Committee (MPC meeting in New Delhi. This has been done to allow tactical flexibility to respond to inflation risks as inflation has reached 4.38% in June, breaching the 4% target set by the RBI for the first time in 17 months.
Besides this, the RBI has retained the bank rate and the Marginal Standing Facility (MSF) for the banks at 5.50% as the RBI braces for stronger CPI inflation at 5% for 2026-27. At the meeting, the RBI expects real GDP growth to be at 6.7% as the RBI aims to keep a neutral monetary policy stance due to risks on interest rate trajectories, liquidity in the markets, and heightened inflation due to the poor monsoon this year.
Following the news, the Sensex gained 400 points briefly, as the markets reacted positively to the stability offered by the RBI, while falling crude prices and sustained FII buying are expected to continue.
The news has seen realty and auto stocks rising, with the Nifty Realty index and the Nifty Auto index rising 2.4% and 1.5% respectively. Following the announcement, midcap and smallcap indices also started to reach fresh highs.
