RBI holds repo rate at 5.25% for second straight meeting amid global tensions
Synopsis
The RBI held the repo rate at 5.25% for the second meeting running, with Governor Sanjay Malhotra pointing to fresh US tariffs and the West Asia crisis as live risks. The central bank's GDP growth forecast for FY27 already stands revised down to 6.6% — and with crude volatile and inflation edging up, the window for any rate move remains narrow.
Key Takeaways
RBI held the repo rate at 5.25% at its 5 August MPC meeting — the second consecutive hold.
SDF rate retained at 5% ; MSF rate and bank rate held at 5.5% .
Governor Sanjay Malhotra cited fresh US tariffs and West Asia crisis volatility as key risks.
RBI revised FY27 real GDP growth forecast to 6.6% (from 6.9% ) at the June meeting.
Domestic conditions remain resilient, supported by favourable monsoon and strong foreign capital inflows.
Inflation is edging higher but remains within the RBI's tolerance band.
The Reserve Bank of India (RBI) on Wednesday, 5 August kept the repo rate unchanged at 5.25%, holding its neutral policy stance for the second consecutive Monetary Policy Committee (MPC) meeting as geopolitical tensions and trade uncertainties continued to cloud the global outlook.
Key Rate Decisions
Alongside the repo rate, the Standing Deposit Facility (SDF) rate was retained at 5%, while the Marginal Standing Facility (MSF) rate and the bank rate both held at 5.5%. The decision was broadly in line with market expectations, with several economists having anticipated that the six-member MPC would maintain the status quo.
What the RBI Governor Said
RBI Governor Sanjay Malhotra flagged persistent trade uncertainties, noting that the United States has imposed fresh tariffs. He added that crude oil prices and financial markets remain volatile amid the ongoing West Asia crisis. Malhotra also cautioned that while the domestic economy remains resilient, 'incipient stress in certain segments' is visible, and 'considerable risks' surround both inflation and growth assessments.
Inflation and Domestic Conditions
Inflation has edged higher in recent months, though it remains within the RBI's tolerance band. Rising crude oil prices, currency movements, and developments in West Asia are among the key factors shaping the central bank's outlook. On the domestic front, conditions have remained broadly supportive, underpinned by healthy growth momentum, a favourable monsoon, and robust foreign capital inflows.
Growth Forecast and Background
At its June MPC meeting, the RBI had revised its real GDP growth forecast for FY27 downward to 6.6% from an earlier projection of 6.9%, citing heightened global uncertainty, geopolitical tensions, supply chain disruptions, and rising energy prices. The June meeting had also unanimously held the repo rate at 5.25%, making the August decision a continuation of that cautious posture.
What to Watch Next
With the West Asia crisis showing no signs of immediate resolution and US tariff pressure persisting, the RBI is likely to keep its options open at the next MPC review. Any sharp uptick in crude oil prices or a significant rupee depreciation could tilt the balance toward a more defensive stance, while sustained domestic resilience may give the committee room to hold steady.
Point of View
Not a pause with a hawkish tilt, but a deliberate neutrality. What is striking is the downward GDP revision to 6.6% sitting alongside a neutral stance: the central bank is essentially acknowledging slowing growth without reaching for the rate-cut lever. That restraint is partly inflation-driven and partly a hedge against rupee vulnerability if the West Asia crisis worsens. The risk is that holding too long while global headwinds mount could leave the RBI behind the curve on growth support — a tension the next two MPC meetings will have to resolve.
NationPress
5 Aug 2026
Frequently Asked Questions
What did the RBI decide at its August 2025 MPC meeting?
The RBI kept the repo rate unchanged at 5.25% at its 5 August MPC meeting, maintaining a neutral policy stance for the second consecutive review. The SDF rate held at 5% and the MSF rate at 5.5%.
Why did the RBI hold the repo rate unchanged?
The RBI cited ongoing geopolitical tensions, fresh US tariffs, volatile crude oil prices, and the West Asia crisis as factors warranting caution. Governor Sanjay Malhotra noted 'considerable risks' surrounding both inflation and growth assessments.
What is the RBI's GDP growth forecast for FY27?
The RBI revised its real GDP growth forecast for FY27 to 6.6%, down from an earlier projection of 6.9%, a cut announced at the June MPC meeting reflecting global uncertainty and rising energy prices.
Is inflation a concern for the RBI right now?
Inflation has edged higher in recent months but remains within the RBI's tolerance band. Rising crude oil prices and currency movements are being closely monitored as potential upside risks to the inflation outlook.
When is the next RBI MPC meeting?
The RBI has not announced the exact date of the next MPC meeting in this review, but MPC meetings are typically held every two months. Markets will watch for any shift in the neutral stance if global conditions deteriorate further.
