In a unanimous decision, the Reserve Bank of India’s Monetary Policy Committee (MPC) has chosen to maintain the repo rate at 5.5% during its August policy review, continuing its cautious approach amid signs of easing inflation. The announcement was made by RBI Governor Sanjay Malhotra on Wednesday.
The three-day policy meeting, held on August 4, 5, and 6, saw all six MPC members vote in favour of keeping the key policy rate under the Liquidity Adjustment Facility unchanged at 5.5%.
“After a detailed assessment of macroeconomic and financial developments, the MPC unanimously decided to maintain the status quo on the policy rate,” said Governor Malhotra.
This comes after the MPC lowered the repo rate by 50 basis points in its previous June meeting, in response to easing inflationary pressures.
India’s retail inflation, measured by the Consumer Price Index (CPI), has fallen to its lowest level in over six years, with June’s provisional figure at 2.10%, down 72 basis points from May, according to the Ministry of Statistics. This is the lowest recorded CPI inflation rate since January 2019.
Food prices have also cooled significantly. The Consumer Food Price Index (CFPI) for June registered a year-on-year inflation of (-) 1.06%, with rural and urban areas showing inflation rates of (-) 0.92% and (-) 1.22%, respectively.
The trend extends to the Wholesale Price Index (WPI) as well, which turned negative in June, standing at (-) 0.13%, down from 0.39% in May. The decline was attributed to reduced prices of food items, mineral oils, crude petroleum, natural gas, and basic metals, according to the Ministry of Commerce and Industry.
RBI Governor Malhotra expressed optimism over India’s near-term economic trajectory. “With the monsoon season progressing well and the upcoming festive season likely to boost consumption, combined with supportive policy measures, the economic outlook remains positive,” he said.
The central bank’s decision to hold rates reflects a careful balancing act—ensuring economic momentum while keeping inflation within the comfort zone. The RBI is expected to continue monitoring global and domestic factors closely in the months ahead.
