Mumbai, Aug 06: The Reserve Bank of India has maintained the repo rate at 5.5 per cent following a unanimous vote by all six members of the Monetary Policy Committee. Announced by RBI Governor Sanjay Malhotra, the decision comes amid a steady drop in inflation and an improving macroeconomic environment.
The policy decision follows three days of deliberations from August 4 to 6, during which the committee reviewed domestic and global financial indicators. This pause in the repo rate comes after the June meeting, when the rate was brought down by 50 basis points in response to falling inflation trends.
Governor Malhotra stated that the latest evaluation of financial and economic data showed enough stability to maintain the current rate. He emphasized that both short- and medium-term inflation levels remain within the central bank’s preferred range, citing softer food prices as a contributing factor.
Retail inflation has continued its downward trend, hitting a six-year low in June. The Consumer Price Index rose 2.10 per cent year-on-year, a 72-basis point drop from May’s figure. The Ministry of Statistics noted this was the lowest rate since January 2019.
Food prices have followed a similar path. The Consumer Food Price Index showed a deflation of 1.06 per cent in June, with rural areas registering a fall of 0.92 per cent and urban areas 1.22 per cent.
Wholesale inflation has also slipped into negative territory. The Wholesale Price Index recorded a decline of 0.13 per cent in June, compared to 0.39 per cent in May. The Ministry of Commerce and Industry attributed the fall to reduced prices in food items, mineral oils, metals, and energy sources.
Looking ahead, Governor Malhotra expressed confidence in the country’s economic outlook. A well-progressing monsoon and the upcoming festival season are expected to boost consumer demand and business activity. Combined with supportive fiscal and monetary frameworks, the environment remains favorable for sustained growth.
The RBI’s stance signals continued caution while allowing room for stability as inflation remains under control and broader economic indicators point to recovery.
