The Reserve Bank of India (RBI) is likely to keep interest rates steady during its next Monetary Policy Committee (MPC) meeting. The meeting is scheduled between August 3 and August 5. A poll of ten economists and treasury heads suggests that the benchmark repo rate (the rate at which RBI lends money to commercial banks) will not change for now. The central bank wants to wait and see how inflation and the monsoon progress before making any big moves.

Most experts believe the RBI will maintain a 'Neutral' stance but keep a 'Hawkish' tone. A hawkish tone means the central bank is very worried about inflation and might raise rates in the future if prices keep rising. The main concerns right now are geopolitical tensions (trouble between countries), high crude oil prices, and an uneven monsoon season. These factors can make food and fuel more expensive for everyone in India.

RBI Governor Sanjay Malhotra has made it clear that controlling inflation is the top priority. Aditi Nayar, Chief Economist at ICRA, mentioned that while core inflation (price rise excluding food and fuel) is currently stable, the RBI will remain cautious. The central bank is also monitoring the FCNR(B) scheme, which helps bring foreign currency deposits into India. This scheme saw strong inflows of over $36 billion between June and July.

Since last year, the RBI has already cut the repo rate by 1.25 per cent to help the economy grow. However, the period of cutting rates might be over for now. In fact, many respondents in the poll expect the RBI to raise rates at least twice during the FY27 financial year if inflation stays high. Balasubramanian R from Dhanlaxmi Bank noted that inflation is currently driven by external factors like global energy prices rather than high demand at home.

Regarding economic growth, experts have mixed views. Some think the RBI might increase its GDP growth forecast because domestic demand is strong. Others worry that global problems and high energy costs could lead to a lower growth projection. The RBI is also expected to keep a close eye on the Indian Rupee to ensure it does not become too volatile (swinging up and down too fast) against other currencies.

For bank officers, this means there may not be an immediate change in lending or deposit rates following the August meeting. However, liquidity management will be important. The RBI might use tools like variable-rate repo auctions to manage the amount of cash in the banking system. More major steps to increase liquidity are expected later in September. Bankers should watch for the official announcement on August 5 to see the final decision on rates and inflation targets.