To reduce or keep the policy repo rate – this can be a difficult call for RBI’s Monetary Policy Committee (MPC) during the upcoming meeting.
While some of the experts claimed that the rate setting panel should take a breath pan after reducing the policy repo rate due to cumulative 100 basic points (BPS), the others think it should continue to exist with the front speed speed cycle.
Those who hit a break expect that the earlier cuts on the economy will work up in the economy.
The break is probably in the background of retail -inflation that stays below the 4 percent target of the panel for the fifth consecutive month in June (with 2.1 percent), the uncertain impact on growth as a result of Trump’s 25 percent rates on the US input and the weakening effect on the rupee and the possibility of the rupee.
Moreover, the recent comments from RBI Governor Sanjay Malhotra probably point to a break in the upcoming meeting of the Monetary Policy Committee (MPC), planned of 4-6 August.
In his comments on a Hoedelchat organized by a business publication, Malhotra noted that the change in the monetary policy position in the bi-monthly policy evaluation (of “accommodation”) along with the 50 BPS Repo Rate-cut in June indicates that the bar would be higher than holding it.
The MPC has reduced the policy-reepo rate three times since February-25 Basic Points (BPS) each in February and April bi-monthly monetary policy evaluation and by a Jumbo 50 BPS in June. The REPO rate is currently 5.50 percent against 6.50 percent before the interest rate reduction of February.
The most important economist Rajani Sinha and senior economist Sarbartho Mukherjee from Care Ratings noted that the RBI had already loaded the speed reductions, anticipating the moderation in inflation. That is why further cutbacks are unlikely, unless the growth delivery is worsening.
The economists of the rating agency noted that with the RBI who have already charged cuts and ensuring sufficient liquidity, the MPC may prefer to pause for now and assess how the macro -economic landscape evolves.
Moreover, the transfer of the previous rate reductions is still underway and can take a little more time to show the effect on the economy.
In addition, a ragless attitude of the American Federal Reserve, continuous trade tension with the US and the recent valuation of the US Dollar Index can offer further reasons to use a waiting option, as extra pressure on the rupid can arise.
“Nevertheless, we expect that the RBI policy statement will retain a Dovish tone, while maintaining a cautious view of evolving worldwide developments,” said Sinha and Mukherjee.
The Barclays economists said in a report that they expect that the MPC from the RBI will deliver a DOVISH break in the coming policy of 6 August, which will retain the attitude as ‘neutral’.
The MPC will probably revise their prediction (of 3.7 percent) for FY25-26 CPI inflation, but let the growth projection (6.5 percent) unchanged, they added. The economists expect a final reduction of 25 basic points in October, which means that the terminal percentage is brought to 5.25%.
Preliminary cuts
SBI’s most important economic adviser Soumya Kanti Ghosh said: “We expect RBI to continue with a 25 bps in August policy. We live in a frontload world. Tarief uncertainty Fronoaded … Better BBP growth for now is a front -seasons in FY27 in FY27 in FY27.
He underlined that empirical evidence suggests that a strong pick -up of credit growth when the festive season has been early and preceded a speed reduction.
Aditi Nayar, Chief Economist, ICRA, said that with the recent CPI prints that signaled a lower process for the second half of this calendar year, the average for FY2026 is likely to be perfected of the MPCs June 2025 guidelines of 3.7%.
Furthermore, the rates imposed by the US will pose a downward risk for GDP growth, while although they are injected volatility into Indian rupees.
“In our opinion, the balance remains somewhat tilted in the direction of a final rate of 25 BPS in the August 2025 policy evaluation,” she said.
Published on August 3, 2025
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