The Reserve Bank of India (RBI) maintained the repo rate at 5.5%, opting for a neutral stance. Governor Malhotra expressed optimism about India’s medium-term economic prospects.
Hitting the pause button on interest rates, the Reserve Bank of India on Wednesday (August 6) kept the repo rate steady at 5.5%, signalling a wait-and-watch approach even as optimism around India’s economic outlook grows.
Announcing the decision after the Monetary Policy Committee (MPC) meeting, RBI Governor Sanjay Malhotra said the central bank would continue with a neutral stance for now. “The Monetary Policy Committee has decided to keep the policy repo rate unchanged at 5.5%,” he said, adding, “The stance of the policy remains neutral.”
But it wasn’t just a technical update. Malhotra also struck an optimistic note about the road ahead. “Over the medium term, the Indian economy holds bright prospects in the changing world order, drawing on its inherent strengths,” he said, offering a glimpse of confidence in the country’s growth potential.
The decision follows the RBI’s surprise move in June, when it slashed the repo rate by 50 basis points to 5.5%, citing easing inflation and stable food prices. At the time, Malhotra had said the central bank saw both short- and medium-term inflation well within its target range — a rare window that allowed the rate cut.
The six-member MPC, which includes three officials from the RBI and three government-nominated external experts, meets every two months to decide the direction of India’s monetary policy. While interest rate decisions often make headlines, they also reflect the central bank’s reading of inflation trends, global headwinds, and domestic economic signals.
This time, with inflation relatively under control and growth stabilising, the RBI appears to be choosing caution over haste. For borrowers and businesses, that means more breathing room — at least for now.