RBI MPC August 2025 Highlights: Panel Maintains Neutral Stance, Governor Cautions Against Tariff Shocks
RBI MPC August 2025 Highlights: The Monetary Policy Committee, chaired by Governor Sanjay Malhotra, will announce the decision on key rates on August 6 at 10 AM and share fiscal policy updates ahead.
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Background
RBI MPC August 2025 Highlights: The Reserve Bank of India (RBI) is set to reveal the outcome of its bi-monthly Monetary Policy Committee (MPC) meeting on Wednesday, August 6. The decision, which will be closely tracked for its implications on borrowing costs, inflation, and economic momentum, is scheduled for 10 AM and will be streamed live via the RBI’s official YouTube channel, X (formerly Twitter) handle, and website.
The three-day deliberations, which commenced on August 4 and conclude today, are being led by RBI Governor Sanjay Malhotra. Following the rate decision, a press briefing is slated for noon to provide additional clarity on the central bank’s outlook and policy trajectory.
Key Focus: Repo Rate and Growth Outlook
The MPC convenes every two months to evaluate macroeconomic developments and recalibrate key policy instruments, most notably the repo rate—the rate at which the RBI lends money to commercial banks. This rate directly influences consumer loan EMIs and deposit interest earnings, making the committee’s decision crucial for households and businesses alike.
In its previous meeting held in June, the central bank implemented a 50 basis point (bps) cut, reducing the repo rate to 5.5 per cent. This marked the third consecutive rate cut in 2025, following earlier reductions of 25 bps each in February and April. The June policy also included a phased reduction of the Cash Reserve Ratio (CRR) by 100 bps to 3 per cent.
The recent rate easing broke an 11-meeting pause and was designed to lower the cost of credit and stimulate domestic demand. However, it also implies reduced interest on savings, a trade-off the central bank continues to weigh amid evolving global conditions.
Industry Outlook: Divided Expectations Ahead of RBI Decision
Commenting on the likely trajectory of the repo rate, Vikas Bhasin, Managing Director of Saya Group, expressed optimism about a further rate reduction.
“We are hopeful that the RBI will continue the rate cut cycle and may opt for another reduction of 25–50 basis points in the repo rate in the upcoming MPC meeting,” he said.
He added, “The cumulative rate cut of 100 basis points this year has already led to a significant reduction in home loan rates for borrowers. A further rate cut will make home loans more affordable and enhance the loan eligibility of home buyers. This will benefit buyers across all segments—from affordable to luxury—throughout the country. We expect this to further boost the demand for homes in the coming months.”
Meanwhile, a more cautious view is shared by Vimal Nadar, National Director and Head of Research at Colliers India.
“Starting in February, the RBI has reduced the repo rate by 100 bps in 2025 through three successive rate cuts. Given the uncertain global economic outlook, volatile trade environment due to resetting tariffs, we expect the Central Bank to remain vigilant and keep the benchmark lending rate steady at 5.5 per cent,” he noted.
He further stated, “The neutral stance is also likely to continue, signaling the end of easing monetary policy cycle. With the transmission of lower interest rates to end users getting completed, we expect real estate developers & lenders to benefit from reduced financing costs. Additionally, prospective homebuyers have started benefiting from lower home loan interest rates & discounts as we usher into the festive second half of 2025, keeping housing sales steady across the major residential markets of the country.”
'Further Rate Cuts Remain Possible But Likely Postponed,' Says HDFC Securities CEO
Dhiraj Relli, MD & CEO, HDFC Securities, said, "The RBI's MPC has, as anticipated, held the repo rate steady at 5.5 per cent following a cumulative 100 basis points cut across three prior meetings. The central bank maintains its neutral stance—judiciously balancing growth support with inflation vigilance as earlier cuts transmit through the economy. India's macroeconomic fundamentals remain resilient. GDP growth for FY2025–26 is projected at 6.5 per cent, anchored by robust consumption, nascent investment revival, and digital economy momentum, though global headwinds, including US tariffs and currency volatility, warrant caution."
"The MPC's measured approach appears prudent. Further rate cuts remain possible but likely postponed until October, contingent on sustained low inflation and evolving external pressures. For investors, close attention should now be paid to monsoon-driven food inflation, the timing and effect of phased CRR reductions, evolving global trade policy, and festive season demand—each of which could influence the trajectory of future rate actions and risk appetite across asset classes," Relli said.
Real Estate Sector’s Growth Momentum Will Definitely Accelerate Further: Expert
Ramani Sastri, Chairman and MD, Sterling Developers, noted, "The residential real estate sector has adapted to the prevailing interest rate environment and continues to show robust performance. The growth trajectory of the realty sector remains positive, and more and more people are investing in the mid, premium, and luxury segment. The housing sector has already been benefiting from the cumulative 100 bps cut in the repo rate, as reflected in the rising consumer demand driven by lower home loan interest rates."
"However, the decision to maintain status quo will keep the ongoing residential real estate sales momentum on course, offering homebuyers assurance of steady loan terms. With sustained demand, we believe that the sector’s growth momentum will definitely accelerate further with continued policy support, firmly establishing the real estate sector as a key driver of the nation's economic development." Sastri opined.
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