The Reserve Bank of India (RBI) on Wednesday kept the repo rate steady at 5.5% during its August Monetary Policy Committee (MPC) meeting, citing favourable macroeconomic indicators and easing inflation. The decision was announced by RBI Governor Sanjay Malhotra following a unanimous vote by all six members of the MPC.
The committee, which met over three days—August 4, 5, and 6—conducted a comprehensive review of economic and financial developments before concluding that no change to the policy rate was necessary at this time.
“After a detailed assessment of the evolving macroeconomic and financial developments and outlook, the MPC voted unanimously to keep the policy repo rate under the Liquidity Adjustment Facility unchanged at 5.5%,” Governor Malhotra stated.
This follows a 50 basis point cut in the repo rate during the June policy meeting, which had brought the rate down from 6% to 5.5%. The earlier reduction was prompted by a visible easing in inflation levels, especially in food prices.
Retail inflation has dropped to its lowest level in over six years. According to provisional data from the Ministry of Statistics, the Consumer Price Index (CPI)-based inflation for June stood at 2.10%, down 72 basis points from May 2025. This marks the lowest CPI inflation since January 2019.
Food inflation has also turned negative. The Consumer Food Price Index (CFPI) for June registered a year-on-year decline of 1.06%, with rural areas reporting a rate of -0.92% and urban areas at -1.22%.
Wholesale inflation, too, has moved into negative territory. The Wholesale Price Index (WPI) for June came in at -0.13%, compared to 0.39% in May. The Ministry of Commerce and Industry attributed this decline to falling prices of food items, mineral oils, basic metals, crude petroleum, and natural gas.
Despite global uncertainties, the RBI remains optimistic about the domestic growth outlook. “The monsoon season is progressing well, and the upcoming festival season typically boosts economic activity. Combined with supportive government and RBI policies, this situation bodes well for the Indian economy in the near term,” Governor Malhotra added.
-ANI