Will RBI Maintain Rates in the Upcoming MPC Meeting on August 6?
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Synopsis
As RBI's Monetary Policy Committee meet approaches, analysts predict that repo rates will remain unchanged. With India's GDP growth outlook improving amidst global uncertainties, this meeting could set the tone for future economic policies. Stay tuned for insights on how these decisions might impact the economy.
Key Takeaways
- RBI likely to keep repo rates unchanged.
- GDP growth forecast at 7 percent for the upcoming quarters.
- Corporate performance expected to improve in the long run.
- Average inflation projected at 4 percent.
- Informal sector incomes could reduce demand for loans.
New Delhi, Aug 1 (NationPress) The Reserve Bank of India (RBI) is expected to maintain the repo rates during the forthcoming Monetary Policy Committee (MPC) meeting scheduled for August 6, according to a report released on Friday.
In light of global market volatility and tariff issues, India’s GDP is anticipated to be around 7 percent in the next three quarters, surpassing previous estimates, as highlighted in a report by HSBC Global Investment Research.
Experts suggest that the GDP deflator is heavily influenced by Wholesale Price Index (WPI) inflation. “This scenario could elevate real GDP growth to approximately 7 percent in the June, September, and December quarters of FY26, exceeding our on-ground growth estimate,” the report indicated.
Analysts predict that corporate performance may see improvements over time.
“From a macroeconomic perspective, the decline in nominal GDP growth in June has reflected in corporate earnings. Our projections suggest this decline in NGDP growth, partly driven by falling prices, may continue until the December quarter. However, a positive aspect is that decreasing input costs can enhance corporate margins,” the report elaborated.
While the formal sector has experienced a slowdown after a robust period, the informal sector has gained strength, leading to uncertainty in growth trends. The data from June was underwhelming, raising questions about whether this is a transient issue due to early rainfall or the beginning of a new trend, as per the report.
The rise in informal sector incomes could reduce the demand for consumption loans. Credit growth is being constrained from both sides. Although RBI's easing measures have provided some relief, reforms that bolster the formal sector might be more effective.
Regarding inflation, the research division projects an average inflation rate of 3 percent in FY26 and 5 percent in FY27, with an overall average of 4 percent. “Core inflation, excluding gold, remains in the 4 percent range and has not significantly decreased over the past year.” The underlying rate aligns with the RBI’s target of 4 percent.
Point of View
The RBI's decision to maintain repo rates is essential for stabilizing the economy amidst fluctuating global markets. Ensuring that inflation remains within target while fostering growth in both formal and informal sectors is crucial. Overall, the RBI's approach should prioritize long-term economic health over short-term fixes.
NationPress
09/08/2025
Frequently Asked Questions
What is the expected repo rate decision by RBI?
The RBI is projected to keep the repo rates unchanged during the upcoming MPC meeting on August 6.
How is India's GDP growth forecasted?
India's GDP is anticipated to reach about 7 percent in the next three quarters, as per recent reports.
What factors could influence corporate results?
Analysts believe that improving corporate results may be a long-term trend, despite current nominal GDP growth weaknesses.
What is the inflation outlook for India?
Average inflation is projected to be 3 percent in FY26 and 5 percent in FY27, averaging around 4 percent.
How do falling input prices affect corporate margins?
Falling input prices can lead to improved corporate margins over time, despite current challenges.
