Overview

• The Monetary Policy Committee kept the repo rate at 5.50% with a neutral stance, voting unanimously to preserve flexibility.
• Members flagged evolving U.S. trade measures as a major drag on external demand and investment, with reports noting tariffs on Indian exports could reach 50% from August 27.
• The RBI described a benign inflation outlook, cutting its FY26 CPI forecast to 3.1% after July retail inflation fell to 1.55%, while officials cautioned core inflation is likely to stay above 4%.
• Policymakers said the 100 bps of front‑loaded easing since February is still transmitting, and an upcoming CRR reduction is expected to aid liquidity and credit flow.
• Several members noted there was space to cut in August but preferred to wait for clearer data, while analysts such as Nomura see potential 25 bps reductions in October and December if conditions allow.