Summary of this article
RBI keeps repo rate unchanged at 5.25 per cent.
Inflation forecast cut, creating room for policy pause.
Borrowers and depositors likely see stable rates ahead.
The Reserve Bank of India (RBI) kept the repo rate unchanged at 5.25 per cent on August 5, 2026, with the Monetary Policy Committee (MPC) maintaining its neutral stance amid a stable inflation outlook and steady economic growth.
The central bank also kept other key policy rates unchanged. The Standing Deposit Facility (SDF) rate remains at 5 per cent, while the Marginal Standing Facility (MSF) rate and Bank Rate remain at 5.50 per cent.
The RBI last lowered the repo rate in December 2025 by 25 basis points (bps) from 5.50 per cent to 5.25 per cent. The central bank has maintained the same rate in every policy meeting since then.
Home Loan Borrowers Get No Immediate Rate Relief
For home loan borrowers, the RBI’s decision means there is unlikely to be any immediate change in lending rates or equated monthly instalments (EMIs). Floating-rate home loans linked to external benchmarks are generally revised when banks adjust their lending rates after changes in the repo rate.
Adhil Shetty, CEO, BankBazaar, said floating home loan rates currently range between around 7.0 per cent and 9.4 per cent at public sector banks and 7.3 per cent to 9.3 per cent at private banks, depending on the borrower’s credit profile. "Those planning to take a home loan can compare lenders on spreads, processing charges and repayment flexibility rather than wait for a policy-led reduction in rates," Shetty said.
For existing borrowers, the unchanged policy rate provides stability on repayment schedules, while prospective homebuyers may focus on lender-specific factors rather than expect an immediate policy-driven reduction in loan rates.
FD Investors May See Rates Stay Stable
For fixed deposit (FD) investors, the unchanged policy rate suggests that deposit rates are also likely to remain broadly stable in the near term. Banks had raised deposit rates in previous cycles to attract funds and manage liquidity, but the pace of changes has moderated as interest rates have stabilised.
Senior citizens and conservative investors who rely on FD may continue to see relatively stable returns, although banks may review deposit rates depending on their funding requirements and liquidity conditions.
Inflation Outlook To Guide Future Rate Decisions
Debopam Chaudhuri, chief economist, Piramal Group, said the biggest surprise from the policy was the RBI’s downward revision of its Q2 inflation forecast. He said the central bank’s view that inflation remains largely supply-driven provides some flexibility on future rate decisions.
"The MPC has created room for another pause in October," Chaudhuri said, adding that stable rates could provide better visibility for banks, non-banking financial companies (NBFCs) and corporates.
He also noted that lower crude oil prices and expected FCNR(B) inflows could support rupee liquidity and improve the broader macroeconomic environment despite global uncertainties.
Shetty mentioned that the unchanged repo rate indicates that inflation remains the RBI’s primary focus. “Existing borrowers are unlikely to see any change in EMIs in the near term,” Shetty said, adding that deposit rates are also expected to remain broadly stable.
Growth Outlook Supports Lending Activity
The RBI raised its FY27 real gross domestic product (GDP) growth forecast to 6.70 per cent from 6.60 per cent, indicating confidence in domestic economic activity.
Rajesh Sharma, managing director, Capri Global Capital, said that stable borrowing costs could support credit demand across segments.
“Predictability in borrowing costs is valuable,” Sharma said, adding that steady rates could help sectors, such as micro, small and medium enterprise (MSME) lending, affordable housing, and gold loans.
The RBI also announced measures related to digital payments and financial markets, including a proposal to raise the Unified Payments Interface (UPI) Lite transaction limit from Rs 5,000 to Rs 10,000.
