The current uncertainty on the external front and ongoing transmission of earlier rate cuts prompted the Reserve Bank of India’s Monetary Policy Committee (MPC) to maintain the status quo in its August meeting, the minutes released
The RBI kept the repo rate unchanged at 5.50%, with the stance retained as neutral, after having already lowered the rate by 100 basis points cumulatively between February and June 2025 and cut the cash reserve ratio (CRR).
Governor Sanjay Malhotra said, “(In) the current state of uncertainty on the external front, monetary policy needs to remain watchful.” He noted that growth at 6.5% reflected resilience but was still below India’s potential.
Urban demand, he added, is likely
External member Nagesh Kumar remarked that while the case for stimulating private investment and demand remains, the MPC “may wait and watch for the transmission of existing actions and how the tariff uncertainties play out, before considering policy actions at the October meeting.”
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External member Ram Singh listed positives supporting growth, including buoyant PMI readings, stronger private fund flows, a healthy monsoon, rising capacity utilisation, and festive demand. However, he cautioned that “stress signs” could limit achieving the projection.
The central bank maintained its FY26 GDP growth forecast at 6.5%, signalling optimism over India’s resilience, but members agreed that heightened global uncertainty warranted caution on fresh policy moves.
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