The Reserve Bank of India's (RBI) three-day Monetary Policy Committee (MPC) meeting -- led by Governor Sanjay Malhotra -- begins on Monday with investors and economists closely tracking the central bank's assessment of inflation, economic growth and the future interest rate trajectory ahead of the policy decision due on August 5.

The policy announcement is expected to provide cues on the outlook for interest rates, liquidity conditions and the broader economy amid an uncertain global environment.

Many analysts expect the six-member MPC to keep the policy repo rate unchanged at 5.25 per cent after maintaining the status quo in its June meeting.

According to SBI Research, the RBI is likely to leave policy rates unchanged as consumer price inflation is expected to remain above 5 per cent over the next two quarters, while domestic economic activity has shown signs of strengthening.

The report said Q1 FY27 GDP growth could exceed 7 per cent, higher than earlier estimates.

It further stated that an explicitly dovish message from the central bank appears unlikely in view of oil price volatility, pressure on the rupee and caution over external capital flows.

However, the report noted that domestic fundamentals have improved helped by strong capital inflows in July, a recovery in foreign exchange buffers, better monsoon conditions and near-normal reservoir levels.

Additionally, at its previous policy review in June, the RBI had unanimously retained the repo rate at 5.25 per cent and kept its policy stance neutral.

The central bank also revised its FY27 GDP growth forecast to 6.6 per cent amid geopolitical tensions.

Markets will also closely watch the RBI's commentary on inflation risks, growth prospects and global developments for signals on the future course of monetary policy.