The six-member MPC led by RBI Governor Sanjay Malhotra flagged “very little policy room” left to stimulate growth.
The Reserve Bank of India’s Monetary Policy Committee (MPC) has held rates in its August review. Repo rates have been held steady at 5.50%, after three rate reductions in the previous policy meetings. Policy stance has been maintained at ‘neutral’.
This policy decision, taken by the MPC maintains the Standing Deposit Facility (SDF) rate to 5.25% and the Marginal Standing Facility (MSF) and Bank Rate to 5.75%.
The Governor of the Reserve Bank of India (RBI), Sanjay Malhotra, noted that the committee believes there is “very little policy room” remaining to boost growth, while emphasizing India’s promising outlook amidst global changes.
The GDP growth forecast for the fiscal year 2026 remains unchanged at 6.5%. The quarterly GDP growth projections stand at 6.5% for Q1FY26, 6.7% for Q2, 6.6% for Q3, and 6.3% for Q4.
But the central bank has revised its FY26 Consumer Price Index (CPI) inflation forecast down to 3.1% from 3.7%. The quarterly projections show estimates at 2.9% in Q1, 3.4% in Q2, 3.9% in Q3, and reaching 4.4% in Q4.
Indian equity markets responded cautiously to the announcements. Benchmark indices remained rangebound, while the Nifty Bank index rose 0.1%.
The governor added that the central bank had set up an internal group to review its liquidity management framework and will soon be publishing that report.
Central Bank’s Moves In 2025
Since February, the RBI has reduced the benchmark repurchase rate by 100 basis points to 5.5%, which includes an unexpectedly large cut in June. Additionally, inflation has eased to the lowest level in more than six years.
Meanwhile, US President Donald Trump has threatened ‘higher tariffs’ on India if it continues to import oil from Russia. This comes after the US imposed a 25% tariff rate and additional penalties just before the August 1 deadline.
When Is The Next MPC Meeting?
MPC reviews are held bi-monthly to decide interest rates, inflation, and growth estimates. The next MPC meeting for 2025 is scheduled for September 29-October 1, followed by December 3-5.
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