- The repo rate was kept unchanged at 5.25%.
- The Standing Deposit Facility rate remained at 5.00%.
- The MSF rate and Bank Rate remained at 5.50%.
- The Monetary Policy Committee retained a neutral stance, meaning the RBI can either increase or reduce rates depending on future economic conditions.
- India’s GDP growth forecast for FY 2026–27 was raised to 6.7%.
- The inflation forecast was reduced to 5.0%.
- The RBI kept interest rates unchanged because the Indian economy continues to grow at a healthy pace.
- However, inflation risks remain due to rising food prices, international crude-oil prices, monsoon uncertainty and geopolitical tensions. Therefore, the RBI decided to wait for more economic data before changing rates.
- Impact: The unchanged repo rate means there may be no immediate major change in home-loan, vehicle-loan and business-loan EMIs. Fixed-deposit rates may also remain broadly stable.
- The RBI will continue monitoring inflation, economic growth, liquidity, crude-oil prices and global developments before taking its next policy decision.
Question:
Q1. What decision did the RBI’s Monetary Policy Committee take regarding the repo rate in August 2026?
a) Increased it to 5.50%
b) Reduced it to 5.00%
c) Kept it unchanged at 5.25%
d) Increased it to 5.75%
Answer: c) On 5 August 2026, the RBI’s Monetary Policy Committee kept the repo rate unchanged at 5.25% and retained a neutral stance. Consequently, there was unlikely to be any immediate major change in home-loan, vehicle-loan and business-loan EMIs.
