RBI keeps Repo Rate unchanged at 5.5% in August policy meet
The Monetary Policy Committee (MPC), which met on the 4th, 5th, and 6th of August, carefully reviewed the latest economic and financial conditions before taking this decision.
The Governor said that all six members of the MPC voted unanimously to maintain the repo rate under the Liquidity Adjustment Facility at 5.5 per cent.
The RBI Governor stated, "After a detailed assessment of the evolving macroeconomic and financial developments and outlook, the MPC voted unanimously to keep the policy record under the Liquidity Adjustment Facility unchanged at 5.5 per cent.
This comes after the MPC had reduced the repo rate by 50 basis points to 5.5 per cent in the previous policy meeting held in June.
The reason for the earlier rate cut was the easing of inflation. Earlier he stated that both near-term and medium-term inflation levels are now within the RBI's comfort zone. He also highlighted that food inflation has remained soft, which gives the central bank more flexibility in its decisions.
Retail inflation in India has continued to fall and has now reached its lowest level in more than six years. According to the Ministry of Statistics, the year-on-year inflation rate based on the Consumer Price Index (CPI) for June was 2.10 per cent (provisional), a drop of 72 basis points compared to May 2025.
This is the lowest CPI inflation rate since January 2019.
Food prices have also dropped. The Consumer Food Price Index (CFPI) for June showed a year-on-year inflation rate of (-) 1.06 per cent (Provisional). In rural areas, the food inflation rate was (-) 0.92 per cent, while in urban areas, it was (-) 1.22 per cent.
Wholesale inflation has also turned negative. The Wholesale Price Index (WPI) for June stood at (-) 0.13 per cent, compared to 0.39 per cent in May. The Ministry of Commerce and Industry said the negative WPI was due to lower prices of food items, mineral oils, basic metals, crude petroleum, and natural gas.
Governor Malhotra added that the economic outlook looks positive. "The monsoon season is progressing well, and the upcoming festival season usually increases economic activity. Combined with supportive government and RBI policies, this situation bodes well for the Indian economy in the near term," he said.
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