RBI keeps policy repo rate unchanged at 5.50% amidst tariff row with US
By Unnikrishnan | 06 Aug 2025
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) at its meeting on Wednesday decided to keep the policy repo rate unchanged at 5.50 per cent voted to maintain the policy repo rate at 5.50 per cent, in view of the evolving geopolitical situation and the US tariff action.
Accordingly, the standing deposit facility (SDF) rate under the liquidity adjustment facility (LAF) remains unchanged at 5.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 5.75 per cent, each.
RBI said the decision will not have any impact on its target of keeping consumer price inflation at 4 per cent (+/- 2 per cent in the medium term, while pursuing growth targets.
The global economic outlook remains clouded with volatile financial market environment and trade disputes arising from geopolitical uncertainties. While the International Monetary Fund (IMF) has revised its forecast for global growth upwards, actual growth remains muted at present. In fact, some advanced economies are traying hard to keep inflation under check.
Domestic economy has shown some resilience on the back of rising private consumption, especially in the rural areas and continuing growth in investment, including government spending on infrastructure to boost economic activity. Farm sector is showing a steady growith on the back of better monsoon rains.
Growth in the services sector and infrastructure and construction activity has been robust, although industrial sector growth remained remained unsteady across various segments, RBI noted.
Inflation has seen a levelling down while capacity utilisation by industrial sectors and supportive financial conditions continue to keep economic activity buoyant. However, trade frictions and uncertain external demand and headwinds from continued geopolitical tensions pose risks to continued economic growth.
RBI expects India’s real GDP growth for 2025-26 to be around 6.5 per cent - with Q1 at 6.5 per cent, Q2 at 6.7 per cent, Q3 at 6.6 per cent, and Q4 at 6.3 per cent.
For the first quarter of the next financial year, RBI has projected real GDP growth at 6.6 per cent.
