No change in rates - RBI maintains repo rate at 5.50%
India's Monetary Policy
Committee (MPC) is said to announce the new monetary
policy
on Wednesday after a massive rate cut of 50 basis points announced in June 2025.
The central bank has slashed the repo rate thrice this year amid global uncertainties on tariffs, protectionism, and trade wars that are affecting the global trade and growth outlook.
The MPC started deliberations on the bi-monthly monetary policy on August 4 and is all set to announce the decision on August 6 (Wednesday).
"Since the February 2025 MPC, the RBI has started to support growth by cutting policy rates. The repo rate has been cut by 50 basis points in two instalments, besides massive liquidity expansion," said MPC member Nagesh Kumar.
The State Bank of India (SBI) announced that it expects a 25 basis points (bps) repo rate cut in the upcoming Monetary Policy Committee (MPC) meeting scheduled from August 4 to 6, stating that a frontloaded rate cut in August could bring an "early Diwali" by boosting credit growth, especially as the festive season in FY26 is also frontloaded.
Here are the key highlights from the June MPC:
The Repo Rate is reduced to 5.5 per cent The Standing Deposit Facility (SDF) rate is now 5.25 per cent The Marginal Standing Facility (MSF) and Bank Rate decreased to 5.75 per cent .The Cash Reserve Ratio (CRR) reduced to 3 per cent The RBI also changed its policy stance from 'accommodative' to 'neutral'.
"As regards the stance for monetary policy, it is important to keep in mind that the stance not only reflects the current macroeconomic conditions, but more importantly the outlook that goes into policy calculus," RBI Governor Sanjay Malhotra said in June.
Growth outlook
In June, India's GDP growth for 2025-26 was projected at 6.5 per cent , continuing the previous forecast.
The quarter-wise forecasts were as follows:
Q1: 6.5 per cent Q2: 6.7 per cent Q3: 6.6 per cent Q4: 6.3 per cent
Inflation
In the last MPC meeting, the central bank's inflation announcements were as follows:
Headline CPI inflation went down from 4 per cent in February 2025 to 3.7 per cent in April 2025Food inflation has declinedFuel inflation stayed in deflation
The quarterly forecast were as follows:
Q1: 2.90 per cent Q2: 3.40 per cent Q3: 3.9 per cent Q4: 4.4 per cent
In the last MPC meeting, RBI stated that outlook for food inflation is looking good, due to the record wheat harvest and strong pulse and kharif arrivals. Core inflation was said to be largely stable and contained. Inflation expectations were showing a moderating trend in the country.
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