The RBI left its key lending rate unchanged this week, sticking with a wait-and-watch approach even as growth continues to hold up well.

The rate panel met between August 3 and 5, its third review of the financial year, and voted unanimously to keep policy on hold.

The repo rate stays at 5.25%. This is the rate at which banks borrow from the RBI, and it eventually shapes what you pay on home loans, car loans and other borrowing.

Other lending benchmarks were left untouched too, with the Marginal Standing Facility and Bank Rate at 5.50% and the deposit facility rate at 5.00%.

The committee kept its “neutral” stance, meaning it isn’t leaning toward a cut or a hike right now.

The bright spot was growth. Citing consistent domestic demand, an increase in manufacturing output, and robust exports, the RBI increased its GDP prediction for the year from 6.6% to 6.7%.

On prices, the central bank actually turned more comfortable. It trimmed its FY27 inflation forecast to 5.0%, down from 5.1% projected in June.

Governor Sanjay Malhotra said the RBI wants more clarity on how inflation trends before it moves in either direction, and flagged no signs yet of price pressures spreading broadly across the economy. Some market economists still expect a shift ahead.

According to some policy-tracking analysts, the RBI may raise rates by 25 to 50 basis points sometime between the end of this fiscal year and the beginning of the next.

This is primarily due to the belief that businesses may begin to pass on higher input costs and that the risks associated with monsoon-related food prices have not completely subsided.

However, the RBI has not indicated this; rather, it is its interpretation of the circumstances. The announcement was accepted by the markets.

The rupee firmed slightly to around 95.01 against the dollar, helped by softer crude prices, while the 10-year government bond yield eased to about 6.78%.

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