RBI MPC Meeting August 2025: Governor Sanjay Malhotra Keeps Repo Rate Unchanged at 5.5%

The Reserve Bank of India (RBI) on Tuesday, August 6, announced that it has decided to keep the key policy repo rate unchanged at 5.5%, maintaining the status quo after a 50 basis point cut in the previous June 2025 meeting.

RBI Governor Sanjay Malhotra, while announcing the outcome of the three-day Monetary Policy Committee (MPC) deliberations, said the decision was taken unanimously by the six-member panel.

“After a detailed assessment of the evolving macroeconomic and financial developments and outlook, the MPC voted unanimously to keep the policy repo rate under the liquidity adjustment facility unchanged at 5.5%,” Malhotra said in his post-policy address.

The policy stance remains ‘Neutral’, reflecting the RBI’s commitment to balancing inflation containment with support for economic growth.

Market expert Ajay Bagga said, “RBI held rates steady while reducing the inflation outlook and maintaining the GDP growth rate as per the previous forecasts. In a unanimous decision, the MPC voted to keep the policy stance at Neutral . Bond markets were expecting no rate cut so there the move is muted. But stock markets are showing some disappointment as the rate cut ahead of the festive season would have helped boost consumption and reduce the cost of bank credit. ”

'The Reserve Bank of India (RBI) concluded its 56th bi-monthly monetary policy meeting on August 6, 2025, choosing to maintain status quo on key policy rates—marking a cautious pause after delivering cumulative rate cuts of 100 basis points in recent months. As widely expected, the central bank kept the repo rate unchanged at 5.5%, while the standing deposit facility (SDF) rate under the liquidity adjustment facility (LAF) remained at 5.25%. Similarly, the marginal standing facility (MSF) rate and the Bank Rate were held steady at 5.75%. This decision reflects the RBI’s intent to allow previous rate reductions and liquidity infusions to fully transmit through the financial system before considering further action,' said Sugandha Sachdeva, Founder of SS WealthStreet.

Inflation Pressures Easing, But Volatile
Governor Malhotra acknowledged that headline inflation has been lower than earlier projections, but attributed much of this to volatile food prices, especially vegetables. However, core inflation, which excludes food and fuel, has remained steady at around 4%, as expected.

“Core inflation has remained steady around the 4% mark, as anticipated,” Malhotra noted.

'The RBI projected headline CPI inflation at 3.1% for FY2025-26. While looking into FY2026-27, CPI inflation for Q1 is projected at 4.9%, indicating a gradual uptick. While core inflation has remained below projections in the past, the recent surge in gold prices may exert upward pressure going forward.
On the growth front, the RBI retained its real GDP growth projection at 6.5% for FY2025-26, supported by strong domestic demand, improving capacity utilization, favorable monsoon conditions, and benign inflationary trends.This robust projection significantly outpaces the global growth forecast of 3–3.1%, highlighting India’s relative macroeconomic resilience,' Sachdeva added.

This shift has allowed the central bank to pause rate changes and observe further data before deciding on future moves.

‘On the currency front, the RBI Governor painted a robust picture of the CAD and the growth in services exports as well as remittances as a positive. In terms of transmission, of the 100 basis points of cuts, around 71 basis points have flown through into the loan rates coming down and 83 basis points has been the weighted average reduction in deposit rates. The strength of bank balance sheets, with low bad loan numbers was also highlighted. Overall, as per expectation Policy, the need is for the fiscal policy to step in now with focussed GST cuts and stimulus injection to enhance the urban consumption which has been lagging. Slight feeling of a missed opportunity in not cutting the rate today,’ added Bagga. 
India’s Economic Outlook Remains Bright
Despite global headwinds, the RBI chief struck an optimistic tone about India’s prospects.
“The Indian economy holds bright prospects in the changing world order, drawing on its inherent strength, robust fundamentals, and comfortable buffers,” Malhotra said, adding that opportunities lie ahead, driven by a “multi-pronged yet cohesive approach to policy-making.”

Global Policy Dilemma: New Equilibrium, Sticky Inflation
On the global front, Malhotra pointed to muted growth, sticky inflation, and high public debt across advanced economies.
“Globally, policymakers are faced with muted growth and slowing inflation. Some advanced economies are even witnessing an uptick in inflation. As the dust settles and a new equilibrium emerges in the global order, we must navigate this modest growth environment carefully,” he said.

‘The policy decision appears to be a hawkish pause, especially in light of rising external headwinds. Escalating trade tensions and fresh tariff impositions by the United States pose downside risks to India’s export momentum and external sector outlook. These global uncertainties, if they intensify, could create room for the RBI to consider one final 25 bps rate cut in the upcoming meeting, potentially marking the end of the current easing cycle,’ added Sachdeva.

Malhotra emphasized that the RBI has taken “decisive and forward-looking measures” in this easing cycle, leveraging the space provided by moderating inflation to support the domestic economy.