RBI MPC Meeting Live: RBI Keeps Repo Rate Steady at 5.5%, Signals Focus on Liquidity and Growth

The Reserve Bank of India (RBI) on Friday, August 6, 2025, kept the policy repo rate unchanged at 5.5%, maintaining a neutral stance in its bi-monthly Monetary Policy Committee (MPC) meeting. RBI Governor Sanjay Malhotra said the decision was unanimous among MPC members and reflects the central bank’s priority to balance growth and inflation control.

Financial Stability and Banking Sector Health
RBI shared a strong outlook on the banking sector's financial health. The Capital to Risk-Weighted Assets Ratio (CRAR) of scheduled commercial banks stands at over 17%, with Net Interest Margin (NIM) at 3.5%, and Gross NPA at a low 2.2%. The Liquidity Coverage Ratio (LCR) remains high at 132%, while the credit-deposit ratio is stable at 78.9%.

Malhotra further said that large corporates are increasingly raising funds via market-based instruments, particularly bonds, as money market transmission has become faster. This trend has also contributed to improved bank profitability.

Liquidity Management in Focus
RBI pledged to maintain ample liquidity in the banking system to support economic activity and smooth market operations. System liquidity has averaged around ₹3 lakh crore per day since the last MPC meeting, compared to ₹1.6 lakh crore in the previous two months.

He added that a 100-bps CRR cut announced earlier this year will continue to improve liquidity. An internal working group formed to review RBI’s liquidity framework has submitted its report, which will soon be released for public consultation.

Economic Outlook and Key Rates
Key rates were left unchanged:

• Standing Deposit Facility (SDF) at 5.25%
• Marginal Standing Facility (MSF) and Bank Rate at 5.75%

The real GDP growth forecast for FY26 remains at 6.5%, broken down as follows:

• Q1: 6.5%
• Q2: 6.7%
• Q3: 6.6%
• Q4: 6.3%

On the inflation front, core inflation rose slightly to 4.4%, largely due to rising gold prices. CPI inflation is expected to hover around 4% in Q4.

External Sector Update

The merchandise trade deficit widened further in Q1, while gross FDI inflows remained steady during April–May FY26. However, net FDI moderated due to higher outward investments.

Conclusion
RBI’s decision to hold rates steady while focusing on liquidity and financial stability highlights a balanced approach toward managing growth and inflation. With strong banking sector indicators and a steady flow of financial resources, the RBI signalled confidence in India’s economic resilience amid global uncertainties.