Key Points:
- The Reserve Bank of India’s Monetary Policy Committee (MPC) has held the repo rate steady at 5.5% in its August 2025 meeting.
- No change in the repo rate means home, car, and other loan EMIs remain unaffected for now.
- The MPC’s stance remains “neutral”, signaling flexibility for future actions.
- FY26 GDP growth forecast retained at 6.5%; inflation forecast (CPI) is down to 3.1% for the year.
- As of August 1, India’s foreign reserves stand at $688.9 billion, covering over 11 months of imports.
- Since February 2025, the RBI has cumulatively cut the repo rate by 100 basis points to support growth.
- The stable rates come amid global trade headwinds, especially new US tariffs, with the RBI encouraging “close vigil” of data and gradual support for growth.
New Delhi: The Reserve Bank of India (RBI) announced after its August Monetary Policy Committee (MPC) meeting that the repo rate will remain unchanged at 5.5%. This move was widely anticipated by economists given recent rate cuts and ongoing global economic uncertainty.
No Impact on Loan EMIs
By holding the repo rate steady, the RBI ensures that there will be no immediate change in home, auto, or other loan EMIs. Borrowers will continue to benefit from the lowest repo rate since before the global pandemic, supporting consumer sentiment and aiding ongoing recovery in the real estate and consumer durables sectors.
Monetary Policy Stance Remains Neutral
RBI Governor Sanjay Malhotra stated, “The MPC unanimously decided to maintain both the repo rate and a neutral stance. While external uncertainties continue, our outlook for inflation and growth remains broadly balanced.” The monetary policy stance remains “neutral”, keeping options open for further adjustments depending on domestic and international developments.
Economic Forecasts: Growth and Inflation
- The GDP growth forecast for FY26 is retained at 6.5%, reflecting confidence in India’s domestic economy despite global trade issues.
- The quarterly growth projections for FY25–26 are:
- Q1: 6.5%
- Q2: 6.7%
- Q3: 6.6%
- Q4: 6.3%
- The inflation (CPI) forecast is lowered to 3.1% for FY26, signaling easing price pressures. June 2025’s inflation stood at 2.1%, the lowest in over six years.
RBI’s Recent Actions and Global Backdrop
- Since February 2025, the RBI has cut the repo rate three times (by 0.25% in February, 0.25% in April, and 0.50% in June), totaling a 1% reduction to spur growth and credit flow.
- The RBI held off further rate cuts this time to monitor policy transmission and the evolving global scenario, especially concerning recent US import tariffs and trade uncertainty.
- India’s foreign exchange reserves are robust at $688.9 billion, providing a strong buffer against external shocks.
Governor Malhotra’s Key Announcements & Outlook
RBI Governor Sanjay Malhotra emphasized:
“Monetary policy has appropriately used the policy space created by benign inflation to support growth without compromising price stability. We remain agile and proactive as changing data and global events dictate.”[3]
He reassured that the RBI’s recent frontloading of cuts means the “bar for more rate cuts is now set high,” with a watchful approach to incoming data and headline risks.
Three new consumer-focused measures were also announced:
- Push for financial inclusion with Jan-Dhan account drives.
- Simplification of claim procedures for deceased bank accounts.
- Expanded access for retail investors to government securities via the RBI platform.
The RBI’s August policy signals monetary stability, confidence in India’s economic growth, and a pause to assess the impact of earlier rate cuts. For borrowers and businesses, this brings predictability, steady EMIs, and the ongoing transmission of lower rates into lending markets. The central bank will continue to monitor inflation and trade headwinds, keeping the door open for adjustments if needed.
