The Reserve Bank of India’s Monetary Policy Committee unanimously decided to maintain the key policy rate at 5.25% per annum, fully in line with analysts’ consensus. The interest rate is being held at its lowest level since mid-2022. The Indian regulator chose to maintain the status quo against a backdrop of mounting instability in the global economy caused by the conflict in the Middle East, disruptions to trade routes, and the imposition of new trade tariffs by the United States.

The regulator’s decision comes amid accelerating growth in domestic consumer prices. Inflation in India has risen for the eighth consecutive month, reaching 4.38% year-on-year in June — the fastest pace since December 2024. The RBI noted that fuel and food prices are the main contributors to the increase, but the effect has not yet translated into broad-based inflationary pressure. The central bank forecasts that headline inflation will reach its peak from Q3 2026 through 2027, slightly downgrading its overall inflation projection for 2026 — from 5.1% to 5.0%.