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Wednesday, July 2, 2025

RBI maintains status quo, policy repo rate unchanged at 6.50 pc

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Mumbai: As widely expected by economists and market watchers, the Reserve Bank of India (RBI) on Thursday kept the policy repo rate unchanged at 6.50 percent.

“The Monetary Policy Committee (MPC) met on August 8, 9, and 10. After detailed deliberation on all relevant aspects, the MPC decided unanimously to keep the policy repo rate unchanged at 6.5 percent,” said RBI Governor Shaktikanta Das.

Consequently, the Standing Deposit Facility (SDF) rate remains at 6.25 percent, and the Marginal Standing Facility (MSF) rate and the Bank rate stand at 6.75 percent.

The RBI Governor said that the MPC decided by a majority of 5 out of 6 members to remain focused on the withdrawal of accommodation to ensure that inflation progressively aligns with the target while supporting growth.

Explaining the rationale behind the MPC’s decisions, the Governor said that headline inflation, after reaching a low of 4.3 percent in May 2023, rose in June and is expected to surge during July and August, led by vegetable prices.

The RBI is tasked with keeping retail inflation in the range of 2–6 percent and maintaining price stability.

“The cumulative rate hike of 250 basis points undertaken by the MPC so far is working its way into the economy. Nevertheless, domestic economic activity is holding up well and is likely to retain its momentum despite weak external demand,” Das said.

The Governor said that the Indian economy is exuding enhanced strength and stability despite the massive shocks to the global economy in recent years.

“Our economy has continued to grow at a reasonable pace, becoming the fifth largest economy in the world and contributing around 15 percent to global growth,” he said while making the monetary policy statement.

He said that India is uniquely placed to benefit from transformational shifts in the global economy in the wake of geopolitical realignments and technological innovations.

“With a large economy marching ahead with vast domestic demand, untapped resources, and demographic advantages, India can become a new growth engine for the world,” he said.

The RBI expects India’s real GDP growth for FY24 to be 6.5 percent, with Q1 at 8%, Q2 at 6.5 percent, Q3 at 6 percent, and Q4 at 5.7 percent.

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