RBI holds repo rate at 5.25 pc, maintains neutral instance as global tensions linger
New Delhi, Aug 5
The Reserve Bank of India on Wednesday kept the repo rate unchanged at 5.25 per cent, and maintaining the status quo in its latest Monetary Policy Committee meeting.
The Standing Deposit Facility (SDF) rate also remained at 5 per cent, while the Marginal Standing Facility (MSF) rate and the bank rate stood at 5.5 per cent.
RBI Governor Sanjay Malhotra said that trade uncertainties linger as US has imposed fresh tariffs. Crude oil and financial markets remain volatile amid West Asia crisis, he added.
Several economists had expected the six-member MPC to maintain the status quo on interest rates and retain its neutral policy stance.
The policy review comes at a time when inflation has edged higher in recent months, though it remains within the RBI's tolerance band. Rising crude oil prices, currency movements and developments in West Asia remain key factors influencing the central bank's outlook.
At the same time, domestic economic conditions have remained resilient, supported by healthy growth momentum, favourable monsoon conditions and robust foreign capital inflows.
It the earlier MPC meeting in June, The MPC unanimously decided to keep the policy repo rate unchanged at 5.25 per cent, in line with the expectations from economists. The Standing Deposit Facility (SDF) rate was set at 5 per cent, while the Marginal Standing Facility (MSF) rate and the bank rate stood at 5.5 per cent.
Malhotra said while the economy remains resilient, incipient stress in certain segments are there and there are considerable risks surrounding both inflation and growth assessments.
In the June meeting, the RBI had revised its real GDP growth forecast for FY27 to 6.6 per cent, down from the earlier projection of 6.9 per cent, reflecting the impact of heightened global uncertainty, geopolitical tensions, supply chain disruptions, and rising energy prices.
— IANS
Reader Comments
Good decision in these uncertain times. But I feel the RBI should be a bit more concerned about growth — 6.6% forecast is decent but we can do better. The government needs to push infrastructure spending and rural consumption to boost demand.
Sensible approach. In a world where the US is imposing tariffs left and right, and the Middle East is in flames, India's economy is showing remarkable stability. RBI governor and MPC deserve credit for their steady hand. Let's hope the monsoon brings down food inflation further.
I'm a small business owner and honestly, I was expecting a small rate cut to help with credit costs. But I understand RBI's caution — global uncertainties are real. Maybe they can ease liquidity through other tools for MSMEs specifically. Anyway, praying things improve soon.
Finally, no increase in my home loan EMI! 🙏 As a first-time homebuyer in Pune, every basis point matters. The neutral stance seems right, but I wish they'd give clear signals about when rates might start coming down. The wait is frustrating.
As an NRI who follows India's economy closely from the US, this is a well-thought-out decision. India's stability is a bright spot in an otherwise turbulent global picture. The FPI inflows also show foreign investors are confident in India's story despite global chaos.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.