New Delhi, August 6: The Reserve Bank of India (RBI) on Wednesday announced that it would keep the repo rate unchanged at 5.5 per cent, continuing with its “neutral” monetary policy stance. The decision was made unanimously by the six-member Monetary Policy Committee (MPC) after a detailed evaluation of the macroeconomic environment and the ongoing growth-inflation dynamics.

RBI Governor Sanjay Malhotra, addressing a press conference in Mumbai, explained that the neutral stance aims to strike a delicate balance—neither tightening nor loosening liquidity conditions—so as to manage inflation without hampering economic growth.

Malhotra noted that while headline inflation has moderated significantly, food price volatility—particularly in vegetables—remains a concern. On the other hand, core inflation has been stable at around 4 per cent.

The Governor added that a favourable monsoon and the onset of the festive season are likely to boost economic activity in the coming months. He expressed confidence in India’s economic prospects, projecting robust medium-term growth despite the backdrop of global trade uncertainties.

“The Indian economy is poised to grow steadily, supported by the proactive policies of both the government and the RBI,” Malhotra said. “This comes even as global growth remains subdued and inflationary pressures persist globally.”

During its previous monetary policy meeting on June 6, the RBI had cut the repo rate by 50 basis points—from 6 per cent to 5.5 per cent—and slashed the Cash Reserve Ratio by 100 basis points in an effort to stimulate economic growth. Since February 2025, the repo rate has been reduced by a total of 100 basis points in successive rounds of easing.

Malhotra explained that while these cuts are meant to reduce borrowing costs and boost consumption and investment, the full benefits depend on how swiftly commercial banks pass on the lower rates to consumers and businesses.

“A lower policy rate increases liquidity and makes loans cheaper, thereby encouraging both consumption and private investment, which in turn fuels economic growth,” he said. “However, the effectiveness of monetary policy depends on transmission.”

He reaffirmed the RBI’s commitment to managing inflation while supporting growth through an accelerated easing cycle.

The central bank’s announcement underscores a cautious yet optimistic approach as it navigates the complex interplay of inflation control and economic recovery.