Source: GlobalData
6 August 2026
Following the Reserve Bank of India’s decision on 05 August 2026 to keep the repo rate unchanged at 5.25% with a neutral stance;
Jaison Davis, Economic Research Analyst at GlobalData, a leading intelligence and productivity platform, provides his perspective:
“This is a deliberate pause, and the RBI can afford it. Inflation is set to rise in the near term. The RBI reads that rise as food- and fuel-led and temporary. A hold at 5.25% avoids tightening into an economy that is already absorbing an external demand shock. The neutral stance is the smart choice. It keeps the option to cut later if growth slows. It also avoids a signal that could unsettle the rupee or the bond market.
“GlobalData sees India’s real GDP growth at 6.66% in 2026 and 6.68% in 2027, and inflation at 4.77% in 2026 and 4.47% in 2027. Inflation stays above the RBI’s 4% target, but it is not out of control. Growth is still strong. That mix supports a steady rate rather than a cut.”
“The growth outlook is the harder call. The US tariff on Indian goods now stands at 18%. That is down from a peak of 50%, but it still weighs on exporters. Sectors such as textiles, gems and jewellery, leather and auto components are the most exposed. They make up more than half of India’s exports to the US. The RBI is keeping rate cuts in reserve until this drag becomes clearer.
“The external side also argues for caution. The rupee has been near record lows this year. It fell to 96.84 against the dollar in May. Foreign investors withdrew about $13.7 billion. Oil is another risk. GlobalData warned in March that the Gulf conflict could push oil toward $100 a barrel. Brent then peaked near $126, and it is firming again. A cut now would widen rate gaps and add pressure on the rupee. That would be a poor trade.
“From here, the main question is how long the pressure lasts. If inflation peaks in the third quarter as expected and growth cools, a cut could come in the second half of FY27. If food, fuel or the rupee spring a surprise, the hold will last longer. For businesses and borrowers, the message is simple. Plan for the repo rate to stay at 5.25% for now. Do not assume the next move is a cut.”
GlobalData is watching three triggers for follow-up analysis. The first is the US and Iran talks. A firm deal would calm the Strait of Hormuz and ease oil and inflation pressure. A breakdown would do the reverse. The second is US tariff policy on pharmaceuticals. The sector is exempt today. Taxing it would hit one of India’s strongest export lines. The third is AI adoption by India’s top IT firms. If it displaces entry-level jobs, weaker wages and spending could push the RBI toward a cut over time.
GlobalData Plc (LSE:DATA) operates an intelligence platform that empowers leaders to act decisively in a world of complexity and change. By uniting proprietary data, human expertise, and purpose-built AI into a single, connected platform, we help organizations see what is coming, move faster, and lead with confidence. Our solutions are used by over 5,000 organizations across the world’s largest industries, providing tailored intelligence that supports strategic planning, innovation, risk management, and sustainable growth.