RBI Repo Rate Update: RBI has not made any changes in the policy rates. The repo rate will remain at 5.5% and the next decision will depend on economic indicators.
RBI Monetary Policy Meet Highlights: The Reserve Bank of India (RBI) has not made any changes in the interest rates in the monetary policy meeting this time. That is, the repo rate remains at 5.5%. This decision was taken in the meeting of the Monetary Policy Committee (MPC), which lasted from 4 to 6 August 2025, which was informed by Governor Sanjay Malhotra on 6 August today. The central bank cut the repo rate by 0.50% in June 2025, decreasing the interest rate to 5.5%. Let’s know what the effect of this decision of RBI means, what will be the effect on your EMI…
What does this decision of RBI mean?
- RBI currently wants to maintain a balance between inflation and growth.
- Given the current economic situation of the country, it is a safe option to keep the rates stable.
- The decision not to change the repo rate has a direct impact on the publicity power of the people, especially the loans are more affected.
When did RBI reduce interest rates this year?
The Reserve Bank of India (RBI) has cut interest rates in three consecutive monetary policy meetings this year. The repo rate is currently at 5.50%. The RBI’s Monetary Policy Committee reduced the repo rate from 6.50% to 6.25% in February 2025. This was the first cut made after about 5 years. The April 2025 meeting again reduced by 0.25%, decreasing the rate to 6%. The third meeting of June 2025 also cut 0.50%, after which the repo rate reached 5.50%. That is, before the August 2025 meeting, 1% was cut this year before the August 2025 meeting.
Also read- RBI’s big gift: Now pre-paying will not be charged pre-payment charge! Know when from when?
What is a repo rate? (What is Repo Rate)
The repo rate is the rate on which banks take loans from RBI for short term. When RBI reduces this rate, banks get the loan cheaper and the customers get the benefit, as banks also reduce loan interest. For example, if you had earlier taken home loan at 9% interest, then new interest can now be 8.5% or even less. This can reduce your EMI and save on total interest.
Also read- SIP Myths vs Reality: Does Mutual Fund be closed due to missing 1 SIP?
Why does RBI reduce or increase interest rate?
When inflation increases, the RBI increases the repo rate so that money reaches less in the market. This makes loans expensive, people spend less and demand decreases. Due to which inflation is brake. When the economy is weak, the Reserve Bank reduces the repo rate so that the bank takes loans cheaply and people get loans easily. This increases money in the market, increases demand and grows growth.