India’s central bank is expected to hold the repo rate steady at 5.5% in its upcoming August 2025 monetary policy meeting, signaling a pause in rate cuts after frontloading 100 bps reductions earlier this year. While inflation forecasts may be trimmed slightly, GDP projections are likely to remain unchanged.
The Reserve Bank of India (RBI) is expected to keep the repo rate unchanged at 5.5% during the upcoming Monetary Policy Committee (MPC) meeting scheduled from August 4 to 6, 2025. This follows a 100 basis points rate cut between February and June, and experts believe the central bank may pause to evaluate the impact of the earlier rate reductions.
The decision comes against the backdrop of moderating headline inflation, now at 2.1% in June 2025, and ongoing geopolitical and trade-related uncertainties. The RBI is also likely to maintain its neutral policy stance, having shifted from an accommodative stance in the June 2025 policy.
While the GDP growth forecast for FY26 is expected to remain at 6.5%, the inflation projection may be revised downward, possibly to 3.5% from the earlier estimate of 3.7%. These projections are seen as aligned with India’s evolving macroeconomic stability and effective monetary transmission.
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The central bank’s cautious tone is also informed by global developments such as the appreciation of the US dollar and external risks, which could place additional pressure on the rupee. Despite these, the RBI has ensured ample liquidity and maintained a data-driven approach to policy adjustments.
If the repo rate remains unchanged, external benchmark lending rates (EBLR) will hold steady. However, banks may revise lending rates linked to Marginal Cost of Fund-Based Lending Rate (MCLR) depending on their internal cost structures.
India’s monetary policy now walks a fine line between sustaining growth and anchoring inflation, and the outcome of the August 2025 policy will reflect the central bank’s calibrated and forward-looking approach.
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