RBI MPC Meeting August 2025: The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, will begin its three-day deliberation today, August 4. The policy decision
will be announced on Wednesday, August 6. With the repo rate currently at 5.5 per cent after three consecutive rate cuts totalling 100 basis points, economists are divided on whether the central bank will go for another reduction or pause for now.
Most Economists Expect Status Quo
Most experts believe the central bank may hold rates steady this time, especially after having frontloaded rate cuts. The RBI MPC has already effected three back-to-back reductions in the short-term lending rate (repo), cumulating to 100 basis points (bps).
Controlled inflation and resilient domestic growth have provided the RBI with some room to manoeuvre, but external headwinds — particularly the 25 per cent US tariffs on Indian exports — have clouded the near-term economic outlook.
Bank of Baroda’s Chief Economist Madan Sabnavis said the monetary policy decision is unlikely to be swayed by June’s low inflation or the latest US tariff development, as much of this had already been factored in during the earlier policy review. He anticipates a marginal downward revision in the inflation projection to 3.5–3.6 per cent but does not expect a rate cut at this stage.
“Therefore, the tariff per se may not really change the view on growth, though it would be interesting to see how the RBI looks at this number. There can be a slight downward revision in inflation projection for the year by 0.1-0.2 per cent, i.e. 3.5-3.6 per cent instead of 3.7 per cent,” Sabnavis said, as per news agency PTI.
CareEdge Ratings also believes the RBI will likely hold off on further cuts. It said the central bank has already responded proactively to inflation trends and would prefer to wait and assess the transmission of previous rate reductions before making any fresh move.
“Hence, we do not expect further rate cuts unless growth concerns aggravate. While the US reciprocal tariff rate and proposed penalty are concerning, the RBI may opt to wait till we get further clarity on this front. With a forward-looking outlook, the RBI would be focusing on inflation in the quarters ahead,” it said.
India’s retail inflation, based on the Consumer Price Index (CPI), declined to 2.1 per cent in June 2025, the latest available data. It is the lowest inflation print after January 2019. The CPI-based inflation had stood at 2.82 per cent in May 2025 and 5.08 per cent in June 2024.
The RBI is mandated to keep inflation at 4%, with a tolerance band of (-/+) 2%.
In June 2025 policy, the RBI revised its retail inflation projection for FY26 to 3.7%, down from its earlier estimate of 4%. This marks the lowest average retail inflation forecast by the central bank in recent years.
Several Economists Expect Rate Cut
However, some economists are still leaning towards one final round of easing. Aditi Nayar, chief economist at ICRA, said that with CPI inflation falling to 2.1 per cent in June and staying well below the RBI’s 4 per cent target, there may be space for one last 25-basis-point rate cut. She also flagged the downside risks to GDP growth stemming from the US tariffs and the resulting rupee volatility.
“Further, the tariffs imposed by the US will pose a downside risk to GDP growth, while admittedly injecting volatility into the INR. In our view, the balance remains slightly tilted towards a final rate cut of 25 bps in the August 2025 policy review,” Nayar said.
Dharmakirti Joshi, Chief Economist at Crisil, echoed this view, saying the risks to economic growth currently outweigh those linked to inflation. “We anticipate a 25 basis point reduction in the repo rate, as inflation has been lower than anticipated,” he noted.
The six-member MPC includes Governor Sanjay Malhotra, Deputy Governor Poonam Gupta, Executive Director Rajiv Ranjan, and three external members: Nagesh Kumar, Saugata Bhattacharya, and Ram Singh.
With inflation under control and economic uncertainty mounting, Wednesday’s policy outcome will reveal whether the RBI continues on the path of monetary easing or chooses to pause and observe the broader global and domestic environment.
In the previous policy review in June 2025, the RBI MPC had announced a surprise 50 basis points repo rate cut, bringing the key policy rate down to 5.5%, and a 100-bps CRR reduction as the RBI signalled confidence in the easing of price pressures amid a supportive global and domestic backdrop.
