Amidst US President Donald Trump's trade policies and the uncertainties surrounding the potential for higher tariffs, the Reserve Bank of India (RBI) on Wednesday maintained the status quo and kept its policy interest rate unchanged. Sharing the details, RBI Governor Sanjay Malhotra said that the six-member rate-setting panel held the repurchase rate at 5.5 per cent in a unanimous vote and decided to continue with a 'neutral' stance.
Malhotra said the Indian economy is "doing very well" and contributing more to global growth than the United States. The statement comes days after US President Donald Trump's remark about India being a dead economy.
Stressing that the impact of the 100 basis points (bps) rate cuts since February 2025 on the economy is still unfolding, the RBI Governor said that the uncertainties of tariffs are still evolving.
Talking about the growth outlook, he said that the service sector is expected to remain buoyant, but the prospects of external demand remain uncertain amidst ongoing tariff announcements and trade negotiations.
"The services sector is expected to remain buoyant, with sustained growth in construction and trade in the coming months. Prospects of external demand, however,
remain uncertain amidst ongoing tariff announcements and trade negotiations," he said.
He, however, did not directly speak about US tariff actions. US President Donald Trump last month slapped a 25 per cent duty on all Indian goods entering the US from August 7, and on Tuesday threatened to substantially hike the tariff for New Delhi's continued purchase of Russian oil.
Highlights Of RBI's August 2025 Monetary Policy
- Short-term lending rate (repo) unchanged at 5.5 per cent
- MPC unanimously decided to keep policy rate unchanged;
- GDP growth projection for FY26 retained at 6.5 per cent
- Governor says domestic growth remains resilient, broadly evolving
- Inflation forecast for FY26 lowered to 3.1 per cent
- CAD expected to remain within sustainable level
- Monetary policy transmission still on
- Impact of 100 basis points (bps) rate cut since Feb on the economy still unfolding
- RBI to standardise claim settlement procedure in bank accounts and lockers of deceased bank customers
- RBI Retail-Direct platform to enable SIP in treasury bills
- Next meeting of MPC scheduled from September 29 to October 1, 2025.
