Introduction to RBI Monetary Policy
The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) has concluded its three-day meeting, and Governor Sanjay Malhotra is set to announce the decision on the key interest rate. Economists predict that the repo rate will remain unchanged, as inflation is within comfort levels and previous rate cuts are still being transmitted through the economy.
Expectations from the MPC Meeting
Analysts believe that the central bank will adopt a "wait-and-watch" approach due to global uncertainties, including the US imposing a 25% import tariff on India. A poll conducted by Financial Express found that almost 90% of economists and market participants expect the MPC to keep the repo rate unchanged. Additionally, all 16 people polled believe that there will be no change in stance.
Key Things to Look Out for
As Governor Malhotra announces the decision, there are several key things to look out for:
- Impact of Tariff Action: The recent imposition of a 25% tariff by the US has increased external risk for the Indian economy, which may require the RBI to make monetary decisions in a cautious and calibrated manner.
- Inflation and GDP Projections: Economists expect the central bank to revise down the projections on the Consumer Price Index (CPI) inflation due to lower food inflation and a benign outlook. However, the RBI may choose to wait for the Q1FY26 GDP growth data release at the end of August before making any changes to growth projections.
- Commentary on Growth: The RBI Governor’s commentary will be crucial, given the uncertainty around tariffs and their potential impact on economic growth.
- Liquidity Measures: Market participants are looking for clarity from the RBI on the desired level of surplus liquidity to be maintained in the banking system, which currently stands at around Rs 4 lakh crore.
Live Updates from the RBI MPC Meeting
The RBI’s Monetary Policy Committee meeting concluded on August 6, 2025, and the decision on the key interest rate was announced at 10:00 am. The meeting was conducted over three days, starting on August 4, and the decision was highly anticipated by economists and market participants.
Conclusion
In conclusion, the RBI’s Monetary Policy Committee meeting has concluded, and the decision on the key interest rate has been announced. With economists predicting a status quo on the repo rate, the focus will be on the RBI’s commentary on growth, inflation, and liquidity measures. As the Indian economy navigates global uncertainties, the RBI’s decision will be closely watched by equity, bond, and currency markets to assess potential future regulatory actions.
