RBI Monetary Policy, MPC Meet 2025 Highlights: The Reserve Bank of India‘s (RBI) Monetary Policy Committee (MPC) has kept key interest rates unchanged at 5.50 per cent and the real GDP growth for FY26 is projected at 6.5 per cent. The MPC meeting is finally over after three days of deliberations. RBI Governor said that measures are being taken to support growth.
The central bank has projected CPI inflation for FY26 at 3.1 per cent with Q2 at 2.1 per cent; Q3 at 3.1 per cent; and Q4 at 4.4 per cent. CPI inflation for Q1FY27 is projected at 4.9 per cent.
Further, the RBI has retained its projection for real GDP growth for FY26 at 6.5 per cent, with Q1 at 6.5 per cent, Q2 at 6.7 per cent, Q3 at 6.6 per cent, and Q4 at 6.3 per cent. Real GDP growth for Q1FY27 is projected at 6.6 per cent.
The RBI has continued with a neutral approach given global uncertainties. Governor Sanjay Malhotra said that the prospects of external demand remain uncertain amidst ongoing tariff announcements and trade negotiations. “The headwinds emanating from prolonged geopolitical tensions, persisting global uncertainties, and volatility in global financial markets pose risks to the growth outlook,” he added. The US has imposed a 25 per cent import tariff on India plus an undisclosed ‘penalty’ for buying military equipment and energy from Russia, while also threatening to raise it even further.
RBI Governor says to take measures to support growth – 3 key takeaways
1. RBI keeps rates unchanged
2. The inflation outlook is more benign now, supported by a strong monsoon. CPI inflation, however, may edge up above 4% on unfavourable base effect and global headwinds. Core inflation likely to remain moderately over 4%
3. The GDP outlook for FY26 is projected to be 6.5%
RBI MPC Meeting August 2025 HIGHLIGHTS:
RBI Monetary Policy 2025 LIVE: Nuvama sees room for more rate cuts
The RBI kept the repo rate unchanged, citing strong growth and opting to wait for the full impact of earlier rate cuts. However, Nuvama suggests the weak rupee may have also influenced the decision.
Nuvama still sees room for more rate cuts, pointing to weak demand, low inflation, and global uncertainty. But the timing may depend on when the US Fed starts easing again.
Read More: RBI to resume rate cuts once Fed begins easing, says Nuvama
RBI Monetary Policy 2025 LIVE: One more repo rate cut expected this fiscal, says Crisil
Dipti Deshpande, Principal Economist, Crisil Ltd, said, “We expect one more repo rate cut this fiscal. A benign inflation outlook and risks from US tariff hikes to economic growth will be the key determinants. The sharper than expected fall in retail inflation in the past two months was driven by volatility in vegetable prices and subdued inflation in foodgrains. Assuming a normal and well-distributed monsoon this season and benign global crude oil prices, we foresee CPI inflation averaging 3.5% this fiscal. The transmission of the repo rate cuts would continue, lifting consumption demand, particularly in the urban areas. Rural consumption will be buoyed by another spell of adequate monsoon and consequently, higher agricultural incomes.”
Crisil maintained its GDP growth forecast at 6.5 per cent with downside risks.
RBI Monetary Policy 2025 LIVE: HSBC holding on to 25bp rate cut call in Q4 2025
HSBC Global Investment Research stated, “We think that if subsequent growth data comes out weaker, the RBI could well lower its FY26 growth forecast and deliver a cut. We are holding on to our 25bp rate cut in 4Q2025. But beyond that, there is only so much growth support the RBI can give. We find that fiscal spending, especially on capex, has picked up in recent months, and space for even more fiscal stimulus may be limited. For the next leg of growth, perhaps it is time to look beyond monetary and fiscal support, and focus on structural reforms, in order to reach "aspirational" levels of growth.”
RBI Monetary Policy 2025 LIVE: No need for further easing yet
VP Nandakumar, Managing Director of Manappuram Finance Limited, said, “The RBI has decided to pause policy rates and maintain a neutral stance, mainly because it requires more clarity on upcoming inflation data and the final US tariff structure, as these are currently creating greater uncertainty. The RBI estimates that, although headline inflation is presently under control, it may rise in the coming quarters, especially in Q4. Furthermore, the transmission of earlier rate cuts is unfolding smoothly. Therefore, the central bank believes that further easing is not necessary at the moment, as liquidity in the banking system is already in surplus, and the CRR cut announced earlier will further improve liquidity conditions.”
RBI Monetary Policy 2025 LIVE: Reaction on RBI MPC announcement
Pratik Shah, National Leader - Financial Services, EY India, said, “This reform is part of a broader set of customer-oriented measures—including simplified re-KYC procedures that highlight the Reserve Bank of India’s (RBI) commitment to improving the banking experience. By establishing uniform claim settlement processes for accounts and safe deposit lockers of deceased customers, the RBI seeks to alleviate the emotional and procedural difficulties faced by grieving families, ensuring empathy, clarity, and consistency during sensitive times.”
RBI Monetary Policy 2025 LIVE: CareEdge maintains growth forecast, as ‘future direction of US trade policy remains uncertain’
Rajani Sinha, Chief Economist, CareEdge Ratings, said, “While inflation has fallen sharply in the last few months, the Central Bank has reiterated that they would be looking at inflation estimates for the quarters ahead. We project CPI inflation to rise above 4% in Q4 FY26 and average above 4.5% in FY27, given the low base of this year. This implies that next year we are looking at a real rate of interest in the range of 1-1.5 per cent and it can even go lower. This limits the scope of any further rate cut in this cycle. Even while highlighting the concerns around the external sector, the Central Bank has chosen to keep the GDP growth projection for FY26 unchanged at 6.5 per cent, marginally higher than our projection of 6.4 per cent.
Despite the downside risks from the high US tariffs, CareEdge maintained its growth forecast, as the future direction of US trade policy remains uncertain.
RBI Monetary Policy 2025 LIVE: RBI was expected to maintain status quo, says Indian Bank MD & CEO
Binod Kumar MD & CEO of Indian Bank, said, “As RBI had a front loaded rate cut, it was expected to maintain the status quo. It is a welcome move. However, it leaves room to reconsider in coming months as CPI is benign and a push for growth may be required. At Indian Bank, we have already passed on benefits of previous rate cuts and expect further normalisation in MCLR as cost of funds continue southward journey.”
RBI Monetary Policy 2025 LIVE: RBI’s decision to hold rates steady beneficial for homebuyers
Shishir Baijal, Chairman and Managing Director, Knight Frank India, said, “The RBI’s decision to hold rates steady underscores its calibrated approach amidst a complex economic backdrop. While inflation has moderated, it remains uneven, and the central bank is understandably cautious given the persistent risks from global commodity prices, geopolitical tensions, and volatile capital flows. For the real estate sector, the continuation of stable policy rates and surplus liquidity conditions provide much-needed predictability and help preserve affordability for homebuyers.”
RBI Monetary Policy 2025 LIVE: Do not have sufficient data to revise GDP forecasts, says RBI Guv at post-MPC presser
At the post-MPC presser, RBI Governor Sanjay Malhotra said that the central bank does not have sufficient data to revise GDP forecasts. “Will maintain a close vigil on incoming data, do not have sufficient data to revise GDP forecasts. Will continue to monitor macroeconomic conditions on a policy to policy basis,” he added.
RBI Monetary Policy 2025 LIVE: Global trade uncertainties have limited direct impact on India’s inflation, says RBI Deputy Governor
At the post-MPC presser, talking about the impact of the global trade uncertainties on inflation in India, RBI Deputy Governor Poonam Gupta said that nearly half of the country’s inflation basket consists of food, which does not get impacted directly by global developments.
“A significant part consists of non-tradeables, which again does not get impacted by global developments. So to that extent, a first-order direct impact of these evolving uncertainties on India’s inflation is likely to be very, very limited,” she added.
Talking about the possible impact of US tariff on India, RBI Governor Sanjay Malhotra, while speaking at the post-MPC presser, said that some of the global uncertainties have already been factored in in the FY25 GDP forecast, as it was cut from 6.7% to 6.5% in the previous policy in June. However, he added that there is “still a lot of uncertainty and it is very difficult to predict the impact”.
On the inflation front, Malhotra said that the RBI does not see any big impact on inflation from Trump tariffs.
RBI Monetary Policy 2025 LIVE: Future policy decisions will be data driven, says Nilesh Shah
Nilesh Shah, MD, Kotak Mahindra AMC, said, “The Credit Policy has come as per market expectations. Growth estimates and policy rates remain unchanged. Inflation estimates revised downwards. The liquidity situation remains comfortable and will remain growth supportive. Future policy decisions will be data driven.”
RBI Monetary Policy 2025 LIVE: ‘RBI to calibrate incremental actions based on evolving domestic growth outlook’
Rajeev Radhakrishnan, CFA, CIO – Fixed Income, SBI Mutual Fund, said, “After the frontloading of policy actions in June, it was unlikely that the RBI would alter the policy rate or guidance in the August review. In an uncertain external environment, marked by trade and tariff disruptions that are likely to keep external demand subdued, the onus of sustaining growth largely rests on domestic policy measures and the evolution of domestic demand drivers. In this context, we continue to expect the RBI to calibrate incremental actions based on the evolving domestic growth outlook.”
RBI Monetary Policy 2025 LIVE: ‘We will continue to be agile and proactive in providing a facilitative monetary policy’
RBI Governor Sanjay Malhotra said, “As the Indian economy strives to attain its rightful place in the global economy, stronger policy frameworks across domains, and not just limited to monetary policy, will be pivotal in its journey. We, on our part, will continue to be agile and proactive in providing a facilitative monetary policy based on incoming data and the evolution of the growth-inflation dynamics.”
RBI Monetary Policy 2025 LIVE: ‘Indian economy navigating a steady growth path with price stability’
To conclude, RBI Governor Sanjay Malhotra said, “Despite a challenging external environment, the Indian economy is navigating a steady growth path with price stability. Monetary policy has appropriately used the policy space created by the benign inflation outlook to support growth without compromising on the primary objective of price stability. Transmission of our recent policy actions to the broader economy is underway.”
RBI Monetary Policy 2025 LIVE: RBI’s three consumer-centric announcements
RBI Governor Sanjay Malhotra made three consumer-centric announcements. “...for us at RBI, the interest and welfare of the citizens of India is foremost. It is the people of India, including those at the bottom of the pyramid, who are our raison detre, or the reason of our being.”
These announcements are:
One, as Jan-dhan Scheme completes 10 years, a large number of accounts have fallen due for re-KYC. The banks are organising camps at Panchayat level from 1st July to 30th September, to open new bank accounts, do re-KYC, and will focus on micro insurance and pension schemes for financial inclusion and customer grievance redress.
Two, RBI will be standardising the procedure for settlement of claims in respect of bank accounts, and articles kept in safe custody or safe deposit lockers of deceased bank customers.
Three, the central bank is expanding the functionality in RBI Retail-Direct platform to enable retail investors to invest in treasury bills through systematic investment plans.
RBI Monetary Policy 2025 LIVE: Update on financial stability
RBI Governor Sanjay Malhotra said, “The system-level financial parameters related to capital adequacy, liquidity, asset quality and profitability of Scheduled Commercial Banks (SCBs) continue to remain healthy. Credit Deposit Ratio (CD ratio) for the banking system at the end of June 2025 was 78.9 per cent, broadly similar to that a year ago. Similarly, the system level parameters of NBFCs too are sound, with adequate capital position and improved GNPA ratios.”
RBI Monetary Policy 2025 LIVE: ‘RBI to continue to be nimble and flexible in its liquidity management’
Going ahead, RBI Governor Sanjay Malhotra said, the Reserve Bank will continue to be nimble and flexible in its liquidity management. “We will endeavour to maintain sufficient liquidity in the banking system so that the productive requirements of the economy are met and transmission to money markets and credit markets remains smooth,” he added.
RBI Monetary Policy 2025 LIVE: Liquidity and financial market conditions
RBI Governor Sanjay Malhotra said, “System liquidity, as measured by the net position under the Liquidity Adjustment Facility (LAF), has been in surplus, on an average of Rs 3.0 lakh crore per day since the last MPC, as compared to an average daily surplus of Rs 1.6 lakh crore during the previous two months.”
Going ahead, as the CRR cut announced in the last policy comes into effect in a staggered manner beginning September, Malhotra said, it would further support liquidity conditions.
RBI Monetary Policy 2025 LIVE: Update on external financing
Gross foreign direct investment (FDI) to India remained strong during April-May FY26. However, net FDI moderated during this period due to higher outward FDI.
Foreign portfolio investment (FPI) inflows to EMEs have remained strong in May and June 2025. However, net FPI to India recorded outflows of $0.8 billion in FY26 so far (April-July 31) due to outflows in the debt segment.
As on August 1, 2025, India’s foreign exchange reserves stood at $688.9 billion, sufficient to cover more than 11 months of merchandise imports. “Overall, India’s external sector remains resilient. We remain confident of meeting our external financing requirements comfortably,” Sanjay Malhotra said.
RBI Monetary Policy 2025 LIVE: India’s CAD moderated to 0.6 per cent of GDP in FY25
India’s current account deficit (CAD) moderated to 0.6 per cent of GDP in 2024- 25 from 0.7 per cent of GDP in 2023-24 due to robust services exports and strong remittances receipts despite higher merchandise trade deficit. Merchandise trade deficit further widened in Q1FY26. Sanjay Malhotra said, “India’s share in world services exports has risen markedly from about 2 per cent in 2005 to 4.3 per cent in 2024, driven by strong software and business services exports. Robust services exports coupled with strong remittance receipts are expected to keep CAD within the sustainable level during the current financial year.”
RBI Monetary Policy 2025 LIVE: RBI Guv on global economies and role of policymakers in navigating through headwinds
Globally, RBI Governor Sanjay Malhotra said, “Policy makers are faced with muted growth and slowing pace of disinflation, with some advanced economies even witnessing an uptick in inflation. As the dust settles and a new equilibrium emerges in the new global order, policymakers will have a tough task navigating a world characterised by modest growth, sticky inflation and elevated public debt levels.”
RBI Monetary Policy 2025 LIVE: RBI Gov on economic growth outlook
RBI Governor Sanjay Malhotra said, “The monsoon season has been progressing well. We are also approaching the festival season, which typically brings greater enthusiasm and buoyancy in economic activity. This favourable domestic setting, together with supportive policies of the Government and the Reserve Bank, augurs well for the Indian economy in the near term, as geopolitical uncertainties have somewhat abated, even though global trade challenges continue to linger.”
Over the medium-term also, he added, the Indian economy holds bright prospects in the changing world order drawing on its inherent strength, robust fundamentals, and comfortable buffers. “Opportunities are there for the taking, and we are making all efforts to create enabling conditions through a multi-pronged yet cohesive approach to policymaking,” he said.
RBI Monetary Policy 2025 LIVE: RBI to conduct 2-day VRRR auction under LAF on August 6
The RBI will conduct a 2-day Variable Rate Reverse Repo (VRRR) auction under LAF on August 06, 2025. On a review of the current and evolving liquidity conditions, the central bank said that it has been decided to conduct a Variable Rate Reverse Repo (VRRR) auction on Wednesday, August 06, 2025.
RBI Monetary Policy 2025 LIVE: Key highlights from MPC announcement
Repo rate: Unchanged at 5.50 per cent
Policy stance: Neutral
Core inflation: Moderately above 4 per cent
GDP forecast for FY26: Retained at 6.5 per cent
Inflation forecast for FY26: 3.1 per cent
RBI Monetary Policy 2025 LIVE: Minutes of MPC meeting on August 20
The RBI governor said that the minutes of the MPC’s meeting will be published on August 20, 2025.
Further, the next meeting of the MPC is scheduled from September 29 to October 1, 2025.
RBI Monetary Policy 2025 LIVE: Guv says policy path hinges on growth-inflation trends
On balance, therefore, RBI Governor Sanjay Malhotra said, “The current macroeconomic conditions, outlook and uncertainties call for continuation of the policy repo rate of 5.5 per cent and wait for further transmission of the front-loaded rate cuts to the credit markets and the broader economy. Accordingly, the MPC unanimously voted to keep the repo rate unchanged.”
He further added that the MPC resolved to maintain a close vigil on the incoming data and the evolving domestic growth-inflation dynamics to chart out the appropriate monetary policy path. Accordingly, all members decided to continue with the neutral stance.
RBI Monetary Policy 2025 LIVE: Rationale for monetary policy decisions - Growth status
Further talking about the rationale for monetary policy decisions, RBI Governor Sanjay Malhotra said, “Growth has held up well with some pick-up expected in the coming festive season and is evolving in line with our assessment of 6.5 per cent for 2025-26.”
RBI Monetary Policy 2025 LIVE: Rationale for monetary policy decisions - Inflation status
Giving the rationale for monetary policy decisions, RBI Governor Sanjay Malhotra said that the MPC noted inflation outlook in the near term has become more benign than anticipated earlier, and the average CPI inflation this year is expected to remain significantly below the target. However, he added, CPI inflation is likely to edge up above the 4 per cent target from Q4FY26 onwards. Moreover, core inflation has been rising steadily from the recent low of 3.6 per cent recorded during December-January 2024-25 and averaged 4.3 per cent in Q1 this year.
RBI Monetary Policy 2025 LIVE: Inflation outlook for FY26 more benign than expected in June, says RBI Guv
RBI Governor Sanjay Malhotra said that the inflation outlook for 2025-26 has become more benign than expected in June. “Large favourable base effects combined with steady progress of the southwest monsoon, healthy kharif sowing, adequate reservoir levels and comfortable buffer stocks of foodgrains have contributed to this moderation,” he said.
CPI inflation, however, is likely to edge up above 4 per cent by Q4FY26 and beyond, as unfavourable base effects, and demand side factors from policy actions come into play.
Barring any major negative shock to input prices, Malhotra said, core inflation is likely to remain moderately above 4 per cent during the year.