RBI repo rate unchanged at 5.5%, the Reserve Bank of India’s Monetary Policy Committee (MPC) announced on August 6, 2025, maintaining a neutral policy stance. Term deposit, lending, and standing facility rates remain steady as macroeconomic risks persist.
🏛️ Key Details of the Decision
- Repo Rate: 5.50%, unchanged
- Policy Stance: Neutral
- MPC Vote: Unanimous decision (6–0) in favor of pause
- Previous Cuts: Total of 100 bps reduction since February 2025, including a 50 bps cut in June
🔎 Economic Context & Rationale
Inflation & Growth
- Inflation Forecast: Revised downward to ~3.1% for FY26 (from earlier 3.7%) The Economic Times
- GDP Growth Outlook: Retained at 6.5% for FY26, with a stable projection for FY27
Global Risks
- RBI noted rising U.S. tariff threats, including a 25% levy on Indian goods, adding uncertainty to export-driven sectors. Governor Sanjay Malhotra emphasized that tariff impacts are evolving and hard to quantify yet .
- RBI remains vigilant of foreign capital flows and rupee volatility, amid external headwinds.
💡 What It Means for Stakeholders
Borrowers & Housing Market
- Borrowing costs remain stable at existing levels. Home loan EMIs continue to be affordable, especially crucial ahead of the festive season, sustaining demand in the real estate sector .
Fixed Deposit (FD) Savers
- Despite high prevailing FD rates, further FD rate declines are expected as transmission of past rate cuts continues. Investors are encouraged to lock in current rates .
Financial Markets
- With liquidity in surplus and policy cuts yet to fully transmit, long-term yields may edge upward. The RBI retains room for future action if economic growth softens or inflation triggers tighten .
📊 Summary at a Glance
| Indicator | Status / Projection |
|---|---|
| Repo Rate | 5.50% (unchanged) |
| Policy Stance | Neutral |
| Inflation FY26 | ~3.1% |
| GDP Growth FY26 | ~6.5% |
| Past Rate Cuts | 100 bps since Feb 2025 |
| Global Risk Factors | U.S. tariffs, trade tensions |
⏭️ Forward Look
The RBI’s next MPC meeting will revisit the path forward based on incoming data—particularly inflation trends, growth momentum, and global developments. Markets will closely watch whether RBI begins further easing later in 2025, depending on how the economic outlook evolves.
