DBS forecasts the RBI will maintain its benchmark rate at 5.25% while monitoring core inflation and global risks.
The Reserve Bank of India’s Monetary Policy Committee is expected to keep the benchmark interest rate unchanged at 5.25% this week, maintaining a neutral stance. The decision follows a focus on core inflation as a key indicator of underlying price pressures, rather than volatile headline inflation influenced by supply-side factors.
Analysts anticipate cautious guidance from the RBI, with attention on geopolitical risks in West Asia and potential shifts in US Federal Reserve policy in late 2026. These factors could impact the rupee, capital flows, and interest rate differentials. The central bank has also reported $40.1bn raised via special swap windows by July 31, up from $20bn in mid-July.
Market conditions remain constructive, with a steepening yield curve and stable onshore liquidity supporting INR bonds. The RBI’s stance is likely to push back against expectations of aggressive tightening in the near term.