The Reserve Bank of India (RBI) is expected to maintain its benchmark interest rate in the August 2025 monetary policy meeting, according to a Reuters poll. However, analysts forecast a rate cut before the year ends, driven by easing inflation and global monetary shifts.
The Reserve Bank of India (RBI), headquartered in Mumbai, serves as India’s central banking institution, responsible for managing monetary policy, maintaining financial stability, and regulating the banking system. It sets key policy rates to influence liquidity and credit flow within the economy.
According to a recent Reuters poll of 74 economists, the central bank is widely expected to keep the benchmark repo rate unchanged at 6.50% during its August 2025 monetary policy review. This would mark the eighth consecutive meeting with no change, signaling a cautious stance despite moderating inflation.
While inflation remains within the RBI’s comfort range, the monetary authority is expected to prioritize consistency until signs of sustained disinflation emerge. Market watchers, however, forecast a pivot before the end of the calendar year, with over 40% of economists in the poll predicting at least one rate cut by December.
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India’s retail inflation has cooled closer to the central bank’s 4% target, providing headroom for potential easing. Yet, concerns over global uncertainties, monsoon-driven food prices, and crude oil volatility have led the Monetary Policy Committee (MPC) to favor a “wait-and-watch” approach.
Despite high borrowing costs, India’s economic growth has remained relatively resilient, backed by strong public infrastructure spending and robust services demand. Still, analysts believe the RBI could act if external pressures ease and domestic output gaps widen.
In terms of forecast, the poll median points to a 25 basis point cut in Q4 of 2025, potentially bringing the repo rate to 6.25%. However, further easing will likely depend on inflation trajectory, fiscal discipline, and global interest rate movements—particularly those of the U.S. Federal Reserve.
As policymakers weigh the timing of monetary easing, market participants will closely monitor inflation prints, GDP growth trends, and central bank forward guidance in the coming months.
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