August 6, 2025 —
The Reserve Bank of India (RBI) has decided to keep key interest rates unchanged, citing persistent global trade uncertainty and muted inflationary pressures at home. In its latest monetary policy review, the central bank maintained the repo rate at 6.50%, continuing its pause for the fifth consecutive meeting.
The decision was widely anticipated by market participants, as headline retail inflation remains well within the RBI’s target band of 2-6%. The reverse repo rate and the marginal standing facility (MSF) rate also remained steady at 3.35% and 6.75%, respectively.
RBI Governor Sanjay Malhotra, addressing the media after the Monetary Policy Committee (MPC) meeting, noted that while domestic macroeconomic indicators remain broadly stable, external conditions are posing increasing risks. “The global demand outlook continues to be uncertain due to sluggish growth in key economies and ongoing geopolitical tensions,” Malhotra said.
The RBI’s monetary stance continues to be “withdrawal of accommodation,” reflecting its cautious approach to balancing growth with inflation control. While inflation in recent months has moderated, the central bank remains vigilant against potential supply-side shocks, particularly in food and energy sectors.
“We have observed a softening in core inflation, but volatility in food prices, driven by erratic monsoon patterns, remains a concern,” Malhotra stated. He added that the MPC will continue to monitor inflation trends closely before taking any future action on rates.
The RBI also revised its GDP growth projection for FY2025-26 slightly upward to 7.2%, supported by resilient domestic demand and an expected pickup in investment activity. However, the central bank warned that a slowdown in global demand, especially from major export markets, could weigh on India’s external sector.
Economists have largely welcomed the RBI’s stance. “The RBI is adopting a prudent approach by keeping rates unchanged amid global uncertainties and the need to support domestic economic momentum,” said Priya Nair, chief economist at Axis Insights.
Financial markets responded positively to the announcement. The BSE Sensex gained over 300 points in intraday trading, while the Indian rupee held steady against the US dollar. Bond yields remained largely flat, with the 10-year benchmark yield hovering around 7.12%.
Looking ahead, the RBI is expected to maintain a wait-and-watch mode unless there is a significant shift in inflation trajectory or external shocks. With global central banks also turning cautious, the RBI’s move underscores the interconnectedness of monetary policy in a globalized economy.
Conclusion:
By keeping interest rates unchanged, the Reserve Bank of India has signaled confidence in the domestic economy while acknowledging rising external uncertainties. As inflation stays within comfort levels but global risks loom large, the RBI’s cautious stance aims to preserve stability without derailing growth prospects. The next few months will be critical in determining whether this balance can be sustained.
