Mumbai 5 Aug 2025 : The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), chaired by Governor Sanjay Malhotra, began deliberations on Monday for the bi-monthly monetary policy review. The six-member MPC meeting will last for three days, and the policy decision will be announced on Wednesday (August 6).
The RBI had started reducing policy rates in February and has since cut the short-term lending rate (repo rate) by one percent over three rounds. Experts believe that the central bank may maintain the status quo this time.
Following the U.S. announcement to impose a 25% tariff on Indian imports from August 7, the central bank may prefer to wait for broader data before taking further action. However, some in the industry are expecting a 0.25% cut in interest rates.
Bank of Baroda’s Chief Economist, Madan Sabnavis, said the policy will not be solely based on June’s low inflation or the recent U.S. tariff move. Aditi Nayar, Chief Economist at ICRA, noted that recent inflation data suggests easing in the second half of the year. She added that the U.S. tariff could pose downside risks to GDP growth and would likely create volatility in the rupee.
Nayar expects a 0.25% rate cut in August but mentioned it could be the last cut in the current cycle.
The MPC includes three RBI officials—Sanjay Malhotra (Governor), Poonam Gupta (Deputy Governor), and Rajeev Ranjan (Executive Director)—and three external members: Nagesh Kumar (Director & CEO, Institute for Studies in Industrial Development), Sougata Bhattacharya (Economist), and Ram Singh (Director, Delhi School of Economics).
Summary:
RBI’s three-day monetary policy meeting has commenced. The final decision, expected Wednesday, may maintain current repo rate amid inflation concerns and global economic uncertainties.