RBI MPC meet: What stayed the same, what changed in August policy review

RBI's Monetary Policy Committee meeting today kept interest rates unchanged, lowered FY26 inflation forecast to 3.1 per cent, and CRR cut to begin in September 2025

The Reserve Bank of India’s Monetary Policy Committee (MPC) at its meeting concluded on August 6 decided to keep all key policy rates unchanged, following significant changes in earlier meetings this year. 

 

RBI MPC: What remains the same

• The policy repo rate remains unchanged at 5.50 per cent, following a 50 basis point (bps) cut in the previous (June 2025) meeting

• The MPC retained its policy stance as ‘neutral’

• The Standing Deposit Facility (SDF) rate remained unchanged at 5.25 per cent, and the Marginal Standing Facility (MSF) rate and bank rate stayed unchanged at 5.75 per cent during the August 2025 RBI MPC meeting

• The RBI retained its real gross domestic product (GDP) growth forecast for FY26 at 6.5 per cent

 

RBI MPC meet: What has changed

• Inflation (CPI) projections for FY26 have been revised further downward: FY26 CPI is now forecast at 3.1 per cent, down from 3.7 per cent in June 2025   

 

CRR cut begins in September

The RBI confirmed that the cut in the cash reserve ratio (CRR), announced in June, will begin from September 2025. RBI Governor Sanjay Malhotra said the move aims to maintain enough liquidity in banks to boost credit growth and keep financial markets stable. The central bank will keep policy rates unchanged so that earlier rate cuts can have their full effect. In June, the RBI decided to reduce the CRR from 4 per cent to 3 per cent of net demand and time liabilities (NDTL), in four steps of 25 basis points each, starting on September 6. 

Malhotra said India’s banking sector remains strong, with good capital, liquidity, and profitability levels. Commercial banks have a Capital to Risk (Weighted) Assets Ratio (CRAR) of 17 per cent, net interest margin of 3.5 per cent, liquidity at 132 per cent, and a credit-deposit ratio of 78.9 per cent. 

Bank credit grew by 12.1 per cent in 2024-25. While this is slower than the 16.3 per cent growth seen in 2023-24, it is still above the 10-year average of 10.3 per cent.

 

RBI MPC meet: Key rates

Repo rate

Previous MPC (June 2025): 5.50 per cent (after 50 bps cut)

Current MPC (August 2025): 5.50 per cent (unchanged)

CPI inflation  

Previous MPC (June 2025): 3.7 per cent projection for FY26    

Current MPC (August 2025): 3.1 per cent projection for FY26

GDP growth       

Previous MPC (June 2025): 6.5 per cent projection for FY26    

Current MPC (August 2025): 6.5 per cent projection for FY26

The quarterly inflation forecast stands as follows:

Q2 FY26: 2.1 per cent, down from 3.4 per cent

Q3 FY26: 3.1 per cent, down from 3.9 per cent

Q4 FY26: Maintained at 4.4 per cent

Q1 FY27: 4.9 per cent

The quarterly GDP forecast stands as follows:

Q1 FY26: 6.5 per cent

Q2 FY26: 6.7 per cent

Q3 FY26: 6.6 per cent

Q4 FY26: 6.3 per cent