New Delhi, Aug 1 — The Reserve Bank of India (RBI) is likely to keep policy rates unchanged in its Monetary Policy Committee (MPC) meeting this month, as consumer price inflation is expected to remain above 5 per cent for the next two quarters and Q1 FY27 domestic product growth may exceed about 7 per cent, a report said on Saturday.
The report from SBI Research said that $35 billion of capital inflows through July have recouped foreign exchange buffers by $12.5 billion by July 24 and vacated the outstanding forward position by $13 billion in the short end (up to 3 months) till June end.
The RBI MPC may, therefore, maintain a status quo on rates, the report said, adding that an explicitly dovish message is less likely given oil volatility, rupee pressure and external flow caution.
The upcoming RBI MPC meeting is scheduled for August 3–5, with the policy rate decision announcement set for August 5.
"Global economy remains uncertain amidst the West Asia crisis, with diverging trends visible across countries. The US economy slowed down unexpectedly in Apr-Jun 2026 quarter", the research firm noted.
"In the last three policies, RBI downgraded Q1 FY 27 GDP growth projection from 6.9 per cent to 6.6 per cent due to war in the Middle east. However, now we believe that situation has changed and Q1 growth print may be much better than anticipated," it noted.
Global currency dynamics remain unbalanced with the rupee bearing most of the brunt in March.
The report mentioned deft manoeuvrability by the RBI in altering the outstanding composition, with a focus on alleviating the pressure along the short or near end to support the rupee from depreciation expectations on account of hedging operations from exporters and importers.
Monsoon has recovered with July surplus showers reducing the nationwide rainfall shortfall to 13 per cent. Reservoir levels are near normal and kharif sowing is only 4.7 per cent lower than 2025 levels, supporting rural demand.
The bank's research wing also flagged concerns about a potential AI bubble. “Every major technological revolution attracts large amounts of capital, speculation, optimism, and sometimes, overoptimism. It is entirely possible that companies are over-investing in AI infrastructure today,” it added.