RBI Keeps Repo Rate Unchanged at 5.25%

Mumbai, Aug 5: The Reserve Bank of India kept its benchmark repo rate unchanged at 5.25 per cent, extending its pause, Governor Sanjay Malhotra announced on Wednesday. The Monetary Policy Committee also retained its “neutral” stance and left other key rates untouched, with the Standing Deposit Facility rate at 5 per cent and both the Marginal Standing Facility rate and the Bank Rate at 5.5 per cent. 

Malhotra said the decision followed an assessment of evolving domestic and global macroeconomic conditions. He noted that the domestic economy had exhibited resilience amid persistent global uncertainty, with growth in the April-June quarter coming in better than expected. Buoyancy in the services sector, he said, may continue to support urban consumption in the months ahead. 

On the external front, the Governor flagged renewed tensions in West Asia, volatility in global financial markets, and El Nino-related downside risks to agricultural output as key factors the MPC would continue to monitor. He said the ongoing conflict had disrupted trade routes and supply chains, increased market volatility and weighed on business sentiment, with crude oil prices, currencies and financial markets continuing to fluctuate in line with developments in the conflict, keeping policymakers on alert for fresh shocks to the inflation trajectory. 

Malhotra added that global growth is expected to slow and inflation is projected to stay elevated through 2026, even as central banks worldwide remain divided between tightening and caution. The RBI has cut the repo rate by a cumulative 125 basis points through 2025 to support growth, but policymakers have signalled they are unlikely to resume easing without greater clarity on inflation and external risks. 

The central bank’s updated growth and inflation projections for FY27, along with commentary on liquidity conditions, the rupee and the oil price outlook, will be watched closely at Malhotra’s post-policy press conference later in the day. The MPC’s next bi-monthly review is scheduled for October, giving the committee time to assess how the West Asia situation, the monsoon and global monetary trends play out before its next rate call. 

Source

• RBI
• PTI