In 1st Monetary Policy After Budget, RBI Keeps Key Repo Rate Unchanged At 6.5%

The Monetary Policy Committee (MPC) held its third bi-monthly policy meeting for financial year25 from August 6 to August 8.

The Reserve Bank of India (RBI) governor Shaktikanta Das announced Monetary Policy decision today (August 8). The Central Bank maintained the status quo & kept repo rate unchanged at 6.5%, in 1st Monetary Policy After Budget. RBI Governor Shaktikanta Das said that the decisions made by the MPC are in view of the economic situation in the country. The Monetary Policy Committee (MPC) held its third bi-monthly policy meeting for financial year25 from August 6 to August 8.

RBI Governor added, “The standing deposit facility rate remains at 6.25 per cent and the marginal standing facility rate and the bank rate at 6.75 per cent. The MPC also decided by a majority of four out of six members to remain focused on the withdrawal of accommodation to ensure that inflation progressively aligns with the target while supporting growth. So as you can see, there is this good amount.”

RBI also kept FY25 GDP growth forecast unchanged at 7.2%. India’s forex reserves touch record high of USD 675 bn as of August 2, said RBI Governor.

RBI Governor On Inflation

RBI Governor projected retail inflation at 4.5 pc during FY’25 assuming normal monsoon. A degree of relief in retail inflation is expected from pickup in southwest monsoon, said RBI Governor. He said ,”The central bank will continue to keep a close watch on the consumer inflation situation in the economy.” He added that core inflation moderated to historic lows in May and June, added RBI governor. MPC has to be vigilant as country is witnessing persistently high food inflation. Overall inflation trajectory moderating, expect continued moderation, but need to be watchful.

Inflation continues to be a significant factor influencing the RBI’s monetary policy stance. Despite core inflation being contained and a noticeable 15-20 percent drop in commodity prices, especially metals, from their 2024 peak, food inflation remains problematic. Experts emphasize that inflation in India still exceeds the RBI’s target range, making it unlikely for the central bank to cut rates until inflation aligns with the 4 percent target.