The 56th Monetary Policy Committee (MPC) meeting, chaired by Shri Sanjay Malhotra, Governor of RBI, took place from August 4–6, 2025. The repo rate remains steady at 5.50%, with GDP growth projected at 6.5% and inflation at 3.1% for FY26.
Overview of RBI Monetary Policy Statement
Key Decisions:
- Repo Rate: 5.50%
- Standing Deposit Facility (SDF): 5.25%
- Marginal Standing Facility (MSF) & Bank Rate: 5.75%
Growth Outlook
Global Scenario:
- Global growth remains subdued with concerns over trade negotiations and tariff changes.
Domestic Economy:
- Economic growth is robust, driven by private consumption and fixed investments.
- Agriculture: Supported by a strong southwest monsoon and kharif sowing.
- Services Sector: Performing well, especially in construction and trade.
- Industrial Sector: Uneven growth with electricity and mining lagging behind.
GDP Growth Projection 2025-26:
- Q1: 6.5%
- Q2: 6.7%
- Q3: 6.6%
- Q4: 6.3%
- Q1 2026-27: 6.6%
Inflation Outlook
Current Situation (June 2025):
- CPI Inflation: 2.1% (77-month low)
- Food Inflation: -0.2%
- Core Inflation: 4.4%
Projection for 2025-26:
- Q2: 2.1%
- Q3: 3.1%
- Q4: 4.4%
- Q1 2026-27: 4.9%
Key Risks
- Weather-related shocks affecting crops
- Global uncertainties and trade disputes
- Demand pressures from policy measures in later quarters
Rationale for Keeping Repo Rate Unchanged
- Inflation Control: Inflation expected to rise due to seasonal factors.
- Economic Growth Stability: Growth remains steady at 6.5%.
- Impact of Previous Rate Cuts: Waiting for full benefits to materialize.
- Uncertain Global Conditions: Monitoring global trends closely.
- Neutral Monetary Policy Stance: MPC to observe data before making changes.
Key Takeaways for Competitive Exams
- Repo Rate: 5.50%
- GDP Growth 2025-26: 6.5%
- Inflation 2025-26: 3.1% (expected to rise above 4% in Q4)
- Reason for no rate change: Waiting for earlier cuts to have full effect; inflation likely to rise later.
- Major Risks: Weather shocks, trade tensions, global inflation trends.
- Next MPC Meeting: September 29 – October 1, 2025.
