The central bank, however, expects inflation to inch up towards the end of the year to 4.4%, and further up to 4.9% in the first quarter of the financial year ending March 2027, due to seasonal trends and base effects.
RBI Monetary Policy August 2025
That’s broadly in line with expectations. Nearly 90% of the economists polled by CNBC-TV18 had predicted the RBI would revise the forecast down to 3.0-3.3%.
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"Inflation outlook has become more benign. Favorable base effect and healthy southwest monsoon are helping ease inflation," said RBI Governor Sanjay Malhotra.
In a recent interview with CNBC-TV18, Malhotra highlighted that the MPC does not favour one objective over the other: "One cannot say inflation is more important than growth, it’s always the mix of both factors." He said decisions will remain data-driven, with more weight given to sustained trends than short-term blips.
Retail inflation has already cooled sharply. The June CPI reading dropped to 2.1%, the lowest since January 2019, and well below May’s reading of 2.82%. Food inflation turned negative at -1.06%, driven by a steep 19% fall in vegetable prices and a nearly 12% drop in pulses.
Economists believe the latest numbers open the door for further policy easing later this year.
“We expect full-year CPI inflation to remain below the
The inflation trend was broad-based. Rural inflation fell to 1.72% from 2.59% in May, while urban inflation eased to 2.56% from 3.07%. Core categories such as housing, fuel, and clothing also saw limited price pressure.
The RBI MPC also unanimously voted to keep the benchmark repo rate unchanged at 5.5%, while retaining its neutral stance. The GDP
