RBI keeps repo rate unchanged at 5.25%
What's the story
The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) has decided to keep the repo rate unchanged at 5.25%. The decision was taken unanimously by the six-member panel, which includes three external members. The MPC also maintained a "neutral" policy stance in its latest review meeting held on August 5. The MPC held the benchmark policy rate steady, extending a pause in place since October 2025, when the RBI trimmed the repo rate from 5.5% to 5.25%.
Rate stability
MPC's decision influenced by rising retail inflation, geopolitical tensions
The MPC's decision comes amid rising retail inflation, which hit 4.38% in June, breaching the RBI's 4% target for the first time in 17 months.
Core inflation has also remained near 4%, indicating persistent price pressures.
Geopolitical tensions, high crude oil prices, and global uncertainty have also contributed to the RBI's decision to hold off on an immediate rate cut.
Inflation impact
Core inflation expected to decline after peaking in Q3
RBI Governor Sanjay Malhotra said in his post-monetary policy speech that while headline inflation has breached the central bank's target, it is mainly due to supply-side pressures from food and fuel.
He added that core inflation remains moderate and is likely to decline after peaking in Q3.
However, growth is expected to be lower this fiscal year despite being resilient.