Mumbai, August 6, 2025 — The Reserve Bank of India (RBI) has kept the repo rate unchanged at 5.5% during its latest Monetary Policy Committee (MPC) meeting, while projecting inflation to average 3.1% in FY26, a downward revision from the earlier estimate of 3.7%.
RBI Governor Sanjay Malhotra, announcing the outcome of the 56th MPC meeting, stated that the decision to maintain rates was unanimous among committee members. The central bank cited a more favorable inflation outlook and a resilient domestic growth environment as key reasons behind the hold.
“The policy stance remains aligned with achieving the medium-term inflation target of 4% within a tolerance band, while supporting growth,” Malhotra said.
Key Highlights:
- Repo Rate: Maintained at 5.5%
- Inflation Projection for FY26: 3.1%
- GDP Growth Forecast for FY26: Retained at 6.5%
- CPI Inflation (June 2025): Declined to 2.1% year-on-year, a 77-month low
The RBI highlighted falling food prices, a strong monsoon, and adequate buffer stocks as contributing factors to the lower inflation trajectory. Food inflation turned negative in June, and core inflation remained contained, despite a slight uptick due to gold prices.
On the growth front, private consumption and government-led investment were noted as strong drivers of economic activity, even as industrial performance remained uneven.
However, the RBI flagged global uncertainties, ongoing geopolitical tensions, and volatile financial markets as potential risks to both inflation and growth.
Looking ahead, the RBI expects inflation to remain within the target range but may rise slightly in late FY26 due to base effects and demand-side pressures. The central bank signaled a “wait and watch” approach for any future rate adjustments.
