Lagatar24 Desk
Mumbai: The Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 5.5%, RBI Governor Sanjay Malhotra announced after the August Monetary Policy Committee (MPC) meeting. This means no immediate relief in EMI payments for loan borrowers, although the central bank has already slashed rates by 100 basis points earlier this year.
MPC’s Decision Reflects Caution Amid Uncertainty
The RBI MPC, which convened from August 4 to 6, unanimously voted to maintain the repo rate under the liquidity adjustment facility at 5.5%. According to Governor Malhotra, the move aims to allow the full transmission of the earlier rate cuts. “The impact of the 100 basis points rate cut since February is still unfolding,” he said. “Current macroeconomic conditions and uncertainties call for continuation of the current rate and patience for broader credit market response.”
Loan EMIs May Not Fall Immediately
While the RBI has cut rates by a full percentage point this year, the benefits are yet to fully reach borrowers in the form of lower monthly instalments. Over the coming months, if banks respond to the policy direction, EMIs could decrease gradually. For now, borrowers will have to wait longer for substantial relief in loan repayments.
Geopolitical Factors Add Pressure
The policy announcement comes amid rising trade tensions with the US, as President Donald Trump has imposed a 25% tariff on Indian exports and warned of further hikes due to India’s continued oil trade with Russia. These developments contribute to global financial uncertainty, influencing RBI’s cautious approach.
