Monetary policy: RBI likely to hold repo rate at 5.5% amid growth concerns, subdued inflation
is expected to maintain the repo rate at 5.5 per cent in its upcoming monetary policy review on August 6, following three consecutive rate cuts totalling 100 basis points.
The central bank's Monetary Policy Committee (MPC), headed by Governor Sanjay Malhotra, will begin its three-day deliberations on Monday.
Tired of too many ads? go ad free now
While inflation remains comfortably below the RBI's target range, with CPI-based retail inflation at 2.1 per cent in June, experts quoted by news agency
PTI
believe the central bank may hold off on further easing to assess the full impact of earlier cuts.
Bank of Baroda chief economist Madan Sabnavis noted that recent inflation prints and the 25 per cent US tariff would have already been factored in during previous policy discussions.
'We do not expect any change of stance or policy rate this time. The tone will be more cautious with some comfort being drawn on the resilient growth front,' he said, as per PTI.
As per CareEdge Ratings, 'the RBI had already frontloaded the rate cuts, anticipating the moderation in inflation,' and further reductions are unlikely unless growth challenges worsen.
The agency added that incomplete transmission of earlier cuts also argues for a pause.
Icra chief economist Aditi Nayar pointed out that 'with recent CPI prints signalling a lower trajectory for the second half of this calendar year,' inflation estimates could be revised downward from the MPC's earlier projection of 3.7 per cent.
'The tariffs imposed by the US will pose a downside risk to GDP growth… the balance remains slightly tilted towards a final rate cut of 25 bps,' she added, as per PTI.
Crisil's Dharmakirti Joshi shared a similar view, anticipating a 25-basis-point cut, citing low inflation and greater risks to growth.
The RBI is tasked with keeping inflation at 4 per cent, with a ±2 per cent margin.
The MPC includes RBI officials Sanjay Malhotra, Poonam Gupta, Rajiv Ranjan, and external members Nagesh Kumar, Saugata Bhattacharya, and Ram Singh.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Indian Express
12 minutes ago
- Indian Express
RBI Monetary Policy Meet LIVE: Repo rate likely to remain unchanged amid Trump tariffs uncertainty
RBI Repo Rate Cut, RBI Monetary Policy Meeting August 2025 Today Live Updates: The Reserve Bank of India's (RBI) six-member Monetary Policy Committee (MPC) is expected to announce its monetary policy — the third bi-monthly one for FY26 — today. Experts are of the view that the RBI Governor Sanjay Malhotra-led committee may keep the repo rate unchanged after slashing it by a bigger-than-expected 50 basis points (bps) in June. With a total cut of 100 bps between February and June this year, the repo rate currently stands at 5.5 per cent. FY26 inflation projection: The August policy announcement on Tuesday comes after the MPC meeting from August 4 to 6. It was held amid the ongoing rising uncertainties around trade tariffs triggered by US President Donald Trump as well as moderation in headline inflation. If it continues to frontload cuts, a 25 bps cut is not ruled out, say economists including State Bank of India's group chief economic advisor Soumya Kanti Ghosh. The MPC is also expected to revise inflation projection for FY26 downward. Further, the RBI may retain its forecast for real gross domestic product (GDP) growth for the current year. © IE Online Media Services Pvt Ltd
Time of India
12 minutes ago
- Time of India
RBI MPC Meeting August 2025 Live Updates: Will RBI governor Sanjay Malhotra cut repo rate? All eyes on GDP growth outlook amidst Trump's US tariff threats
07:42 (IST) Aug 06 Here's Bajaj Broking Research's view on key focus areas from RBI MPC Meeting: * After reducing the repo rate by a cumulative 100 basis points over the last three meetings—bringing it down from 6.5% in February to 5.5% in June—the committee is now widely expected to maintain the status quo. Most economists believe the MPC will keep both the repo rate and its neutral policy stance unchanged * Consumer Price Index (CPI) inflation eased sharply to 2.1% in June, well below the RBI's 4% target. However, rising core inflation, uneven monsoons, and wage pressures pose upside risks. The MPC may lower its FY26 inflation forecast but is likely to retain a cautious outlook, continuing to monitor emerging risks. The GDP growth projection for FY26 is expected to be left unchanged, indicating measured confidence in domestic demand resilience amid global headwinds * External factors such as recent US tariff hikes and rupee volatility further add to the uncertainty. With these risks in play, the RBI is expected to adopt a 'wait and watch' approach, refraining from additional easing until there is more clarity * Having already front-loaded rate cuts and ensured adequate liquidity, the MPC is likely to pause and allow time for the effects of previous measures to filter through the economy. Any further rate action—if deemed necessary—is anticipated only in October or beyond, once more data on festive demand, agricultural output, and global conditions is available. * Despite adopting a neutral policy stance, the Reserve Bank of India (RBI) has indicated that the Government may still cut the repo rate in the future if circumstances warrant. RBI Governor Sanjay Malhotra clarified after the June 2025 policy meeting that a neutral stance means interest rates can move either way depending on the evolving data. He stated, 'It will depend on how the data comes the growth is weaker, it can mean[the repo rate] will go down. If the growth is good, inflation is going up, the repo rate can go up'
Mint
12 minutes ago
- Mint
Indian shares set to open flat ahead of RBI policy decision
Aug 6 (Reuters) - Indian shares are set to open little changed on Wednesday ahead of the Reserve Bank of India's (RBI) policy announcement, with investors anticipating a rate pause and dovish signals to offset rising external risks, particularly the proposed U.S. tariffs. Gift Nifty futures were trading at 24,670 points as of 7:04 a.m. IST, indicating that the Nifty 50 will open near Tuesday's close of 24,649.55. The RBI is widely expected to hold rates steady at its policy decision scheduled at 10:00 a.m. IST, following its surprise 50-basis-point cut in June, which was accompanied by a shift to a "neutral" stance. While the central bank had previously signalled limited room for further easing, expectations for the reassurance of growth and dovish commentary have intensified following the U.S.'s 25% tariffs on Indian goods. "In light of the proposed U.S. tariffs, markets will be looking for a dovish tone and clear reassurance on growth support," said Gaurav Garg, analyst at Lemonn Markets Desk. "The Governor's guidance on balancing domestic demand with external headwinds will be key." Since the June 6 policy, the Nifty 50 has slipped 1.41%, weighed down by muted earnings and global uncertainty. Foreign portfolio investors were net sellers for 12 straight sessions till Tuesday, reacting to trade concerns and earnings disappointment. Meanwhile, domestic institutional investors sold stocks in 22 sessions, providing some cushion to FPI outflows. "The sustained FPI selling was largely driven by a combination of subdued Q1 earnings, a strong U.S. dollar and uncertainty surrounding the U.S-India trade negotiations," said Manish Goel, founder and managing director at Equentis Wealth Advisory Services. FPI outflows may continue till there is greater clarity on trade policy and an improvement in corporate earnings, Goel added. Broader Asian markets opened lower, while Wall Street declined overnight as investors weighed tariff concerns and weaker than expected U.S. economic data. (Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sumana Nandy and Janane Venkatraman)
