RBI Holds Repo Rate At 5.50% Amid Global Tensions And Low Inflation

The Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 5.50%, pausing after a series of cuts earlier this year. The move came during its Monetary Policy Committee (MPC) meeting held on August 6, 2025.

No surprises here. All six members of the MPC backed the decision. No change in stance either — RBI is keeping it neutral. That means no strong lean towards a hike or a cut just yet.

This steady hand comes at a time when India’s economy is walking a tightrope. On one side, inflation has cooled off. On the other, new U.S. tariffs on Indian goods have triggered uncertainty in trade and exports.

RBI Playing Safe

Governor Sanjay Malhotra made it clear — the central bank isn’t in a rush. Inflation looks under control, yes, but global risks are growing louder. The RBI doesn’t want to drain its ammo too soon. If things go south, they want room to move.

Inflation Cooling Off Fast

India’s retail inflation (CPI) for June hit 2.1%, a level the country hasn’t seen in years. That’s well below the RBI’s comfort zone. The updated forecast for the full year (FY2025-26) is now 3.1%, trimmed down from the earlier 3.7%.

Core inflation — the kind that skips food and fuel — is still hovering around 4%. Not too hot. Not too cold.

Growth Still on Track

Despite global tremors, RBI isn’t throwing in the towel on growth. The central bank is sticking with its 6.5% GDP growth forecast for this financial year.

Quarterly projections:

Q1 FY26: 6.5%
Q2: 6.7%
Q3: 6.6%
Q4: 6.3%

Looking ahead, Q1 FY27 is expected to come in at 6.6%. That’s a solid runway — if India can dodge global hits.

Other Key Rates

SDF: 5.25%
MSF and Bank Rate: 5.75%
CRR (Cash Reserve Ratio): 3.0%

The CRR was already cut in June to help banks free up more liquidity.

No Fireworks in the Market

Investors took the news in stride. No major jumps. No steep drops. Financial stocks stayed calm. The RBI’s neutral stance gave the market a sense of stability — no unexpected shocks, and no hard pivots.

What This Means for You

If you’re holding out for cheaper home loans, you might have to wait a bit longer. Rates won’t drop just yet. But with inflation this low, banks could still find ways to sweeten the deal.

For savers? Fixed deposit rates are likely to stay where they are, unless inflation pressures start climbing again. Either way, the next MPC meet could swing things.

Final Take

RBI made a calculated move here. They’re not reacting out of panic or pressure. Instead, they’re watching, waiting, and keeping their tools sharp in case things turn.

India’s growth is holding, inflation is down, and the global winds are unpredictable. For now, the RBI is staying grounded — and ready.

Stay tuned to MoneyPhobia.in for more updates on the Indian economy and financial markets.