Governor Malhotra\u2019s fourth monetary policy address<\/a> since taking charge. In his speech, he made several observations about how India\u2019s economy is currently placed and how it might be impacted by the ongoing changes in the global trade environment.<\/p>\nRBI HOLDS RATE, CAUTIONS ON TRADE UNCERTAINTY<\/p>\n
Governor Malhotra confirmed that the MPC had unanimously decided to maintain the policy repo rate at 5.5%. Other key rates, the Standing Deposit Facility at 5.25% and the Marginal Standing Facility and Bank Rate at 5.75%, also remain unchanged.<\/p>\n
\u201cThe MPC met on the 4th, 5th and 6th of August. After a detailed assessment of the evolving macroeconomic and financial developments and the outlook, the MPC voted unanimously to keep the policy repo rate unchanged at 5.5%,\u201d he said.<\/p>\n
He added that the committee would continue to keep a close watch on new data and changing domestic and global conditions. \u201cThe MPC further resolved to maintain a close vigil on the incoming data and the evolving domestic growth-inflation dynamics to chart out the appropriate monetary policy path. Accordingly, all members decided to continue with a neutral stance,\u201d he said.<\/p>\n
US TARIFFS A POINT OF CONCERN FOR GROWTH<\/p>\n
One of the key highlights of the Governor\u2019s speech was his comment on the growing global trade tensions. Referring to the recent announcements of tariffs and ongoing trade negotiations, Governor Malhotra said these developments could affect India\u2019s growth going forward.<\/p>\n
\u201cProspects of external demand remain uncertain amidst ongoing tariff announcements and trade negotiations. The headwinds emanating from prolonged geopolitical tensions, persisting global uncertainties, and volatility in global financial markets pose risks to the growth outlook,\u201d he said.<\/p>\n
He explained that while India\u2019s domestic economy is showing strength, global trade issues like tariffs could bring challenges.<\/p>\n
\u201cGrowth is robust and as per earlier projections though below our aspirations. The uncertainties of tariffs are still evolving. Monetary policy transmission is continuing,\u201d the Governor said.<\/p>\n
GROWTH FORECAST KEPT AT 6.5%<\/p>\n
Despite the uncertainty, the RBI has maintained its GDP growth forecast for the full year 2025\u201326 at 6.5%. The quarterly projections stand at 6.5% for Q1, 6.7% for Q2, 6.6% for Q3 and 6.3% for Q4. The RBI also projected a 6.6% growth rate for Q1 of 2026\u201327.<\/p>\n
\u201cTurning to the growth outlook, the above-normal southwest monsoon, lower inflation, rising capacity utilisation, and congenial financial conditions continue to support domestic economic activity,\u201d said Malhotra. \u201cThe supportive monetary, regulatory and fiscal policies including robust government capital expenditure should also boost demand.\u201d<\/p>\n
He added that construction and trade were two sectors expected to drive services growth in the coming months.<\/p>\n
INFLATION UNDER CONTROL, BUT FOOD PRICES VOLATILE<\/p>\n
The Governor acknowledged that headline inflation has dropped sharply, which gave the central bank room to pause further rate cuts for now.<\/p>\n
\u201cHeadline inflation is much lower than projected earlier, mainly due to volatile food prices, especially of vegetables. Core inflation, on the other hand, has remained steady around the 4% mark, as anticipated. Inflation is projected to go up from the last quarter of this financial year,\u201d he said.<\/p>\n
The RBI had earlier cut rates by 100 basis points since February 2025, and the Governor said the effects of those cuts are still being felt in the wider economy.<\/p>\n
\u201cThe impact of the 100 bps rate cuts since February 2025 on the economy is still unfolding,\u201d he said.<\/p>\n
GLOBAL OUTLOOK STILL UNCERTAIN<\/p>\n
Governor Malhotra also spoke about the broader global economic picture, pointing out that policymakers around the world are still facing difficulties due to low growth and sticky inflation.<\/p>\n
\u201cPolitical uncertainties have somewhat abated, even though global trade challenges continue to linger. Over the medium term, the Indian economy holds bright prospects in the changing world order, drawing on its inherent strength, robust fundamentals and comfortable buffers,\u201d he said.<\/p>\n
\u201cGlobally, policymakers are faced with muted growth and slowing pace of inflation, with some advanced economies even witnessing an uptick in inflation. As the dust settles and a new equilibrium emerges in the new global order, policy-makers will have a tough task navigating a world characterised by modest growth, sticky inflation and elevated public debt levels,\u201d he added.<\/p>\n
The next MPC meeting is scheduled from September 29 to October 1, 2025.<\/p>\n
– Ends<\/p>\n
Published On: <\/p>\n
Aug 6, 2025<\/p>\n","protected":false},"excerpt":{"rendered":"The Reserve Bank of India (RBI) on Wednesday held its key lending rate steady at 5.5% during its…\n","protected":false},"author":2,"featured_media":47584,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,26694,26698,26695,26701,26690,26700,26693,26702,26689,26699,26691,26697,26692,56,54,55,26696],"class_list":["post-47583","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-india-inflation-update","tag-rbi-august-6-announcement","tag-rbi-gdp-forecast","tag-rbi-global-trade-tensions","tag-rbi-governor-on-us-tariffs","tag-rbi-home-loan-news","tag-rbi-interest-rate-news","tag-rbi-monetary-policy-statement","tag-rbi-mpc-august-2025","tag-rbi-next-mpc-date","tag-rbi-policy-decision","tag-repo-rate-unchanged","tag-sanjay-malhotra-speech","tag-uk","tag-united-kingdom","tag-unitedkingdom","tag-us-india-trade-impact"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/47583","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=47583"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/47583\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/47584"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=47583"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=47583"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=47583"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}