India’s Central Bank Maintains Interest Rates Amid Global Market Volatility

On Thursday, August 8, the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) decided to maintain the benchmark repo rate at 6.5 percent for the ninth consecutive meeting. This decision, made by a 4:2 majority, also saw the RBI retain its policy stance of ‘withdrawal of accommodation.’
The standing deposit facility (SDF) rate remains at 6.25 percent, while both the marginal standing facility (MSF) rate and the bank rate are held steady at 6.75 percent.
The RBI has adjusted its real GDP growth forecast for FY25 slightly, projecting growth of 7.2 percent for the full year. For Q1 FY25, the forecast was revised to 7.1 percent from the earlier estimate of 7.3 percent. The growth projections for Q2, Q3, and Q4 FY25 remain unchanged at 7.2 percent, 7.3 percent, and 7.2 percent, respectively, while the Q1 FY26 forecast stays at 7.2 percent.
The MPC also upheld its CPI-based inflation projection for FY25 at 4.5 percent, with some quarterly adjustments. The Q2 FY25 inflation forecast increased to 4.4 percent from 3.8 percent, Q3’s forecast rose to 4.7 percent from 4.6 percent, and Q4’s forecast decreased to 4.3 percent from 4.5 percent. The forecast for Q1 FY26 is set at 4.4 percent.
RBI Governor Shaktikanta Das commented, “Headline inflation is moderating, but the pace is uneven and slow,” reflecting ongoing concerns about inflationary pressures despite robust economic growth.