RBI Likely to Hold Interest Rates Amid Oil Price Risks

The Reserve Bank of India's Monetary Policy Committee (MPC) is expected to keep interest rates unchanged at its forthcoming meeting on August 5, amid rising oil prices and inflation risks.

Retail inflation rose to 4.38% year-on-year in June, exceeding the central bank's target of 4%. Experts say that despite elevated global crude oil prices and a weak monsoon, the domestic economy remains resilient.

Sonal Badhan, an economist at Bank of Baroda, believes that MPC members will remain watchful of the progress of the monsoon and its impact on food inflation. 'We expect RBI to remain on hold for now and also keep the stance unchanged,' she said.

Mandar Pitale, Head of Financial Markets at SBM Bank (India), expects cautionary guidance from MPC due to global oil prices and monsoon-related risks. He notes that oil prices in the $90 to $100 range per barrel will increase price pressures, potentially leading to rate hikes in the second half of FY26-27.