The Monetary Policy Committee (MPC) after assessing the current and evolving macroeconomic situation, voted to maintain the policy repo rate at 5.50%. 

Consequently, the standing deposit facility (SDF) rate under the liquidity adjustment facility (LAF) remains unchanged at 5.25% and the marginal standing facility (MSF) rate and the Bank Rate at 5.75%.

This decision is in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4%within a band of +/- 2%, while supporting growth.

Taking various factors into account, projection for real GDP growth for 2025-26 has been retained at 6.5%, with Q1 at 6.5%, Q2 at 6.7%, Q3 at 6.6%, and Q4 at 6.3%. 

Real GDP growth for Q1:2026-27 is projected at 6.6%. The risks are evenly balanced.

The MPC observed that inflation outlook for 2025-26 has become more benign than expected in June. 

Large favourable base effects combined with steady progress of the southwest monsoon, healthy kharif sowing, adequate reservoir levels and comfortable buffer stocks of foodgrains have contributed to this moderation. 

CPI inflation, however, is likely to edge up above 4% by Q4:2025-26 and beyond, as unfavourable base effects, and demand side factors from policy actions come into play. Barring any major negative shock to input prices, core inflation is likely to remain moderately above 4 per cent during the year, the MPC observed.

Also Read: Monetary Policy Committee meeting LIVE: RBI keeps repo rate unchanged at 5.5%

Weather-related shocks pose risks to inflation outlook, it added.

 Considering all these factors, CPI inflation for 2025-26 is now projected at 3.1% as compared with 3.7% projected in June 2025 with Q2 at 2.1%; Q3 at 3.1%; and Q4 at 4.4%. CPI inflation for Q1:2026-27 is projected at 4.9% (Chart 2). The risks are evenly balanced.

RBI governor Sanjay Malhotra in his monetary policy statement said together with supportive policies of the Government and the Reserve Bank, augurs well for the Indian economy in the near term, as geopolitical uncertainties have somewhat abated, even though global trade challenges continue to linger. 

“Over the medium-term also, the Indian economy holds bright prospects in the changing world order drawing on its inherent strength, robust fundamentals, and comfortable buffers. Opportunities are there for the taking, and we are making all efforts to create enabling conditions through a multi-pronged yet cohesive approach to policymaking,” he said.

“Globally, policy makers are faced with muted growth and slowing pace of disinflation, with some advanced economies even witnessing an uptick in inflation. As the dust settles and a new equilibrium emerges in the new global order, policymakers will have a tough task navigating a world characterised by modest growth, sticky inflation and elevated public debt levels,” he added.

He said the RBI has taken decisive and forward-looking measures to support growth. “The coordinated use of various tools available to us has helped accelerate monetary policy transmission in the current easing cycle,” he said. 

Mr Malhotra said that MPC noted that, while headline inflation is much lower than projected earlier, it is mainly due to volatile food prices, especially of vegetables. 

“Core inflation,on the other hand, has remained steady around the 4 per cent mark, as anticipated. Inflation is projected to go up from the last quarter of this financial year,” he said.

“Growth is robust and as per earlier projections though below our aspirations. The uncertainties of tariffs are still evolving. Monetary policy transmission is continuing. The impact of the 100 bps rate cut since February 2025 on the economy is still unfolding,” he said.

“On balance, therefore, the current macroeconomic conditions, outlook and uncertainties call for continuation of the policy repo rate of 5.5 per cent and wait for further transmission of the front-loaded rate cut to the credit markets and the broader economy,” he added. 

Accordingly, the MPC unanimously voted to keep the repo rate unchanged, he said explaining the rationale behind the decision. 

The MPC further resolved to maintain a close vigil on the incoming data and the evolving domestic growth-inflation dynamics to chart out the appropriate monetary policy path. Accordingly, all members decided to continue with the neutral stance, he stated. 

Published – August 06, 2025 11:02 am IST

The Indian economy is growing at a robust pace and will not face any challenge in achieving a growth rate upwards of 6.5% in the current financial year, RBI Monetary Policy Committee (MPC) member Nagesh Kumar said on Sunday (July 27, 2025).

Mr. Kumar, in an interview with PTI Videos, further said that the Indian economy, among all economies, continues to remain a bright spot for the world.

“Actually, more than a third of global economies are under the debt crisis…The industrialised economies are facing a lot of pressure, high inflation and the slowdown of economic growth,” he said.

But because the Indian economy is more driven by domestic consumption and domestic investment, and less by export or trade, Mr. Kumar said India continues to grow very robustly.

“I do not see any challenges in the Indian economy achieving upwards of 6.5% kind of growth in the current year and the following year. And, you know, hopefully this kind of growth momentum will continue for coming years but also be over time strengthened to 7-7.5%,” he said.

Also read: India to grow at 6.5% in FY26: EY Report

The Indian economy is estimated to have grown at 6.5% in the previous fiscal year.

As per the Reserve Bank of India’s projections, the country’s economy will expand at the same rate in the current fiscal year as well.

Responding to a question on inflation, Mr. Kumar said the current rate of CPI inflation is around 2% and this is largely a result of the policy adopted by the MPC (monetary policy committee) or RBI, and now it has come down to within the target range.

Asked if there is room for the RBI for further rate cuts, he said, “It will depend on all different macro numbers, not just inflation numbers. If inflation comes down to 2% in one month, then it does not mean that it will stay there.”

The RBI has cut the key rates by 1 percentage point this year, and official data pointing to headline inflation cooling to 2.1% in June against the 4% target has led to expectations of further easing.

The six-member monetary panel of the RBI is expected to announce its next bimonthly policy in August.

“So, MPC will have to look at trend projections, not only inflation data but all other macro-parameters and reach a conclusion on the basis of what the trends and patterns look like,” Mr. Kumar observed.

The RBI has been tasked by the government to ensure retail inflation remains at 4% with a margin of 2% on either side.

Responding to a question on India’s proposed Bilateral Trade Agreement (BTA) with the U.S., Mr. Kumar said, “If we can get through this agreement, then we will get access to America’s vast market in the labour-intensive sector where India has a competitive advantage because of our abundant labour resources.”

Mr. Kumar pointed out that India has some concerns about opening up its agriculture sector, the dairy sector and a few others.

Noting that trade negotiations are based on give and take, he said, “Supposing certain things, we agree to open up but there could be a quota placed, which will limit the tariff advantage given to the partner only for a limited quantity.”

So, Mr. Kumar said, there are various ways to manage a trade negotiation and he is sure that Indian negotiators are trying to protect the country’s interests in the best possible manner while also getting access to some of the labour-intensive goods markets.

U.S. President Donald Trump has said the proposed trade deal with India would be on the lines of what America has finalised with Indonesia on Tuesday (July 22, 2025).

Under the U.S.-Indonesia trade pact, the Southeast Asian nation will provide complete access to its market to U.S. products, while Indonesian goods would attract a 19% duty in America.

In addition, Indonesia has committed to purchasing $15 billion in U.S. energy, $4.5 billion in American Agricultural Products, and 50 Boeing jets.

India has hardened its position on the U.S. demand for duty concessions on agri and dairy products. New Delhi has, so far, not given any duty concessions to any of its trading partners in a free trade agreement in the dairy sector.

India is seeking the removal of the additional tariff of 26% announced by the U.S. in April. The implementation of the additional tariff has been suspended until August 1, 2025.

India is also seeking an easing of tariffs on steel and aluminium (50%) and the auto (25%) sectors. Against these, India has reserved its right under the WTO (World Trade Organisation) norms to impose retaliatory duties.

Responding to a question on the surge in net outward foreign direct investment (FDI), Mr. Kumar said as far as gross FDI numbers are concerned, they have shown a good increase from $71 billion to $81 billion in 2024-25.

“Net FDI inflows look smaller because there have been a lot of repatriations… I am not too concerned about outflows of repatriation, as long as the gross inflows keep growing, which they are at this moment,” he said.

Mr. Kumar asserted that the continued good and robust performance of the Indian economy will continue to attract global companies to India, and the FDI outlook for the country will remain very positive and will attract more and more FDI inflows in the coming year.

According to UNCTAD’s latest World Investment Report, global FDI flows declined by 11% to $1.5 trillion in 2024, marking the second straight year of decline.

Published – July 27, 2025 01:35 pm IST

 The decision taken at the RBI Governor Shaktikanta Das headed six-member Monetary Policy Committee will be announced on Friday (December 6, 2024)
| Photo Credit: Reuters

Reserve Bank’s high level panel on Wednesday (December 4, 2024) started deliberations on the bi-monthly monetary policy amid expectations of status quo on interest rate as the retail inflation is above the upper tolerance level of the central bank.

The decision taken at the RBI Governor Shaktikanta Das headed six-member Monetary Policy Committee (MPC) will be announced on Friday (December 6).

Mr. Das is chairing the last MPC meeting of his current term which ends on December 10.

The government has tasked the RBI to ensure consumer price index (CPI) based inflation remains at 4% with a margin of 2% on the either side.

The Reserve Bank has kept the repo or short-term lending rate unchanged at 6.5% since February 2023 and experts think some easing could only be possible in 2025.

“We do not foresee rate cut during the current FY… First rate cut and further change in stance likely in April 2025,” said a SBI research report.

The report further said it is better that the second quarter growth numbers “do not prompt a knee jerk reaction” in terms of monetary impulse like rate cut as headline inflation continues to trade at uncomfortable levels.

India’s economic growth slowed to near two-year low of 5.4% in the July-September quarter of this fiscal due to poor performance of manufacturing and mining sectors. The gross domestic product (GDP) had expanded by 8.1% in the July-September quarter of 2023-24 fiscal.

The central bank last hiked the repo rate to 6.5% in February 2023 and since then it has held the rate at the same level.

The RBI kept the repo rate unchanged in its last bi-monthly review (October) also amid risks from higher food inflation.

On expectations from the MPC, Mandar Pitale, Head Treasury, SBM Bank India, said the RBI may consider to infuse durable liquidity by phased reduction in CRR (25 basis points in 2 phases till the next MPC meeting) to support growth through liquidity injection rather than considering a rate cut. MPC may also consider an option of infusing durable liquidity through OMO purchase.

Atul Monga, CEO and Co-founder of BASIC Home Loan, too expects the RBI to keep the repo rate unchanged with an aim to balance inflation and support economic growth.

“With the repo rate remaining unchanged, housing demand is expected to remain steady, especially in the mid-range and luxury segments, supported by stable interest rates. Both developers and home buyers can benefit from predictability in borrowing costs,” Monga said.

In an off-cycle meeting in May 2022, the MPC raised the policy rate by 40 basis points and it was followed by rate hikes of varying sizes, in the subsequent meetings till February 2023. The repo rate was raised by 250 basis points cumulatively between May 2022 and February 2023.

The MPC members are: Nagesh Kumar, Director and Chief Executive, Institute for Studies in Industrial Development, New Delhi; Saugata Bhattacharya, Economist; Ram Singh, Director, Delhi School of Economics; Rajiv Ranjan, Executive Director, RBI; Michael Debabrata Patra, Deputy Governor, RBI; and Shaktikanta Das, Governor, RBI.

The RBI cited the favourable agricultural crop outlook which could ease food inflation pressures, subject to weather risks. File photo
| Photo Credit: REUTERS

The Reserve Bank of India (RBI) has projected India’s real GDP growth for FY25 at 7.2 per cent, while CPI inflation for the fiscal year is expected to moderate to 4.5 per cent, post Monetary Policy Committee (MPC) meeting on Wednesday (October 9, 2024).

Also read:Account verification facility for NEFT, RTGS soon: RBI

Mr. Das said, “Real GDP growth for 2024-25 is projected at 7.2 per cent. With Q2 at 7 per cent, Q3 at 7.4 per cent and Q4 7.4 per cent. Real GDP growth for Q1 of next financial year that is 2025-26 is projected at 7.3 per cent and the risks are evenly balanced.

According to RBI Governor Shaktikanta Das, growth for the fiscal year will be supported by robust quarterly performances.

However, Inflation in the third quarter is forecasted a little higher at 4.8 per cent, with further moderation anticipated in the fourth quarter when the kharif harvest comes.

However, RBI cautioned that the agricultural output remains susceptible to weather-related shocks, which could influence inflationary trends.

In contrast of India’s Gross Domestic Product (GDP) growth for the first quarter of FY25, Mr. Das said, “Real GDP grew by 6.7 per cent in the first quarter of this financial year, that is, 2024-2025, and this was led by a revival in private consumption and improvement in investment. The share of investment in GDP reached its highest level since 2012-2013. Government expenditure, on the other hand, contracted during the first quarter.”

“On the supply side, gross value added, that is, GVA, expanded by 6.8 per cent, surpassing the GDP growth, aided by strong industrial and services sector activities. High-frequency indicators available so far suggest that domestic economic activity continues to be steady,” Mr. Das added.

On the liquidity front, surplus conditions prevailed in August, September, and early October, though liquidity levels shifted back in late September. However, the agriculture and services sectors remained strong, and government consumption showed signs of improvement. Private investment intentions are also improving, reflecting growing confidence in the economy. Mr. Das said, “MPC noted that currently, the macroeconomic parameters of inflation and growth are well balanced.