IGI Logo

The Reserve Bank of India (RBI) kept its key interest rate unchanged on Thursday, as widely expected, as it continued its efforts to sustainably lower inflation towards its 4% target.

The Monetary Policy Committee (MPC), which consists of three RBI and three external members, kept the repo rate unchanged at 6.50% for a ninth straight policy meeting.

All 59 economists in the Reuters poll conducted in late July predicted the central bank would stand pat on rates.

COMMENTARY:

DEEPAK AGRAWAL, CIO - DEBT, KOTAK MAHINDRA AMC, MUMBAI

"Amidst the global volatility in financial and divergent central banker actions, RBI remained calm."

"RBI has not taken active measure on liquidity front and intend to continue with VRRR (variable rate reverse repo) auction to suck out surplus liquidity."

MADHAVI ARORA, LEAD ECONOMIST, EMKAY GLOBAL, MUMBAI

"The fluidity of global Goldilocks narratives, financial markets turmoil and policy repricings found little space in the Governor's speech, thanks to recent easing volatility in the financial markets."

"However, noisy food inflation back home, and a still-elusive 4% inflation target formed the base for the RBI decision making."

SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM

"The overall tone of the policy was on the hawkish side and expectations of a pivot from the RBI need to be pushed forward for now. We see the case of an October rate cut weaken after Thursday's address."

RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE

"Policy guidance reinforced that domestic considerations will be prioritised, despite a sharp buildup in rate cut pricing for the US Fed. The RBI MPC retained its cautious tone on inflation, in the face of an anticipated passthrough from perishables price pressures and tariff adjustments."

"With domestic demand conditions calling for a focus on inflation, we expect the policy rate to stay on hold for the rest of the year."

GARIMA KAPOOR, ECONOMIST, INSTITUTIONAL EQUITIES, ELARA SECURITIES, MUMBAI

"Prioritizing price stability to maintain macroeconomic stability amid still healthy domestic growth, MPC decided to remain focused on the withdrawal of accommodation and retained policy repo rate in line with our expectations."

"We continue to retain our expectations of a stance change in Q3FY25 followed by a 25 bps rate cut in Q4FY25. The tone remained fairly balanced with reiteration on India's macro and financial stability amid a rise in global volatility lately."

UPASNA BHARDWAJ, CHIEF ECONOMIST KOTAK MAHINDRA BANK, MUMBAI

"The RBI expectedly kept rates and stance unchanged, with the unambiguous focus being retained on inflation. With growth remaining robust the MPC still has room to hold on to policy stance to get confirmation on the disinflationary trend."

"We continue to expect scope for change in stance in the October policy with rate cuts beginning from December. The prospects of simultaneous change in stance and rate cuts could increase depending on how domestic inflation and global environment transitions."