RBI Monetary Policy: India’s Reserve Bank (RBI) Monetary Policy Committee (MPC), which is led by Governor Sanjay Malhotra, said on August 6, 2025, that the policy repo rate would stay at 5.5%. The central bank is still taking a neutral stance as it carefully handles ongoing trade tensions with the US while keeping the prospects for domestic growth stable. After three rate cuts earlier in the year, which added up to 100 basis points since February 2025, there is now a break.
Looking at both the domestic and international economic situations
The choice to keep the current rate shows a careful look at both internal economic data and problems from other countries, especially the US government’s rising tariffs. But the MPC is sure that the Indian economy is on a steady growth path and that inflation is under control, even though there are unknowns.
Key interest rates and a policy stance of “neutrality”
The Reserve Bank of India (RBI) left the repo rate at 5.5%, the SDF rate at 5.25%, the MSF rate at 5.75%, and the bank rate at 5.5%. The neutral approach means that the central bank will keep a close eye on inflation and growth trends without committing to either raising or lowering interest rates right away.
Updated predictions for growth and inflation
The MPC lowered its prediction for inflation in the financial year 2025–26 from 3.7% to 3.1%. This is because inflationary forces have weakened. Inflation based on the Consumer Price Index (CPI) fell to a five-year low of 2.1% in June 2025. The GDP growth estimate stays the same at 6.5 percent, which is a sign of confidence in India’s economy in the face of global uncertainty.
How Rate Cuts in the Past Affect Borrowers
The loosening of policy earlier this year, which included a surprise 50 basis-point cut in June, was meant to help growth in a time of trade tensions and price uncertainty. Because of this, banks have lowered lending rates based on both external standards and the marginal cost of funds. This makes credit more accessible to more people.
Outlook: A Balanced Approach to Inflation and Growth
The MPC’s neutral stance shows that they are taking a balanced approach to balancing their goals for growth and controlling inflation. This makes sure that monetary policy stays flexible. The RBI also said that loan rates and EMIs would stay the same shortly, which is in line with the policy rate staying the same.
By keeping the repo rate the same during this time of ongoing trade tensions between the US and India, the RBI shows that it is still committed to keeping the economy growing steadily while effectively controlling inflation risks.
