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India Holds Rates as Expected but Flags Tariff Risks

INDIA, AUG 6 – The Reserve Bank of India paused after three rate cuts, lowering inflation forecast to 3.1% for FY26 while maintaining GDP growth at 6.5% amid trade and geopolitical risks.

  • The Reserve Bank of India Monetary Policy Committee of August 6, 2025, voted unanimously to keep the repo rate at 5.5% and maintain a neutral stance.
  • Amid growing trade tensions, the MPC highlighted waiting for the transmission of earlier rate cuts to credit markets.
  • The RBI lowered its CPI inflation forecast for FY26 to 3.1% while maintaining growth at 6.5%, as headline inflation declined to 2.1% in June, the lowest since January 2019.
  • After the hold, external benchmark lending rates linked to the repo rate will remain unchanged and lenders may revise MCLR-linked loan rates.
  • Bank of America analysts said a rate cut could come in the fourth quarter of 2025, with Malhotra warning that tariff uncertainties require ongoing vigilance.
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Moneycontrol broke the news in India on Tuesday, August 5, 2025.
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