Will RBI announce a repo rate cut tomorrow? Here is what experts say about August MPC meet outcome

The Reserve Bank of India will announce the outcome of its Monetary Policy Committee (MPC) meeting on Wednesday, August 6, amid a volatile global landscape but falling inflation in the country.

The critical meeting started on Monday, August 4, and all stakeholders are now closely tracking the developments to see if the six-member MPC will decide on another repo rate cut or go for the pause-and-act strategy this time.

Over the three bi-monthly MPC meetings held in 2025, the apex bank cut the repo rate by 100 basis points (1%), from 6.5% in February to 5.5% in June, with a mega 50 bps cut announced in the June meet. Further, the monetary policy stance was shifted to ‘neutral’ in June from ‘accommodative’ in April, hinting at an easing environment.

India’s retail inflation in June eased to 2.10%, the lowest year-on-year (YoY) rise seen since January 2019. The inflation, measured by the All India Consumer Price Index (CPI), declined by 72 bps from 2.82% recorded in May. Moreover, food inflation (Consumer Food Price Index) was at -1.06% in June against 0.99% in May.

Will the RBI cut the repo rate in August?

Many experts are expecting the central bank to keep the rates unchanged this time.

“With the RBI having already frontloaded rate cuts and ensured ample liquidity, the MPC may prefer to pause for now and assess how the macroeconomic landscape evolves. Additionally, transmission of the previous rate cuts is still underway and could take some more time to show its effect on the economy,” CareEdge Ratings said in a report on August 1.

Frontloading repo rate cuts means implementing larger or quicker repo rate cuts early on instead of spreading out small ones over a longer period of time.

With increasing trade tensions due to the US announcing 25% tariffs on India, a wait-and-watch approach could come in handy to see what the coming months will look like for the country’s economy.

The report added, “Moreover, a hawkish stance from the US Federal Reserve, ongoing trade tension with the US and recent appreciation of the US dollar index could provide further reasons for adopting a wait-and-watch approach, as additional pressure on the rupee may emerge.”

As the RBI’s neutral stance has made space for both rate cuts and hikes, the RBI could wait for more macroeconomic data, including demand, agricultural output and global conditions, before announcing another rate cut this month.

Financial services firm Nuvama also reported on a similar tone, suggesting that the RBI could maintain the 5.5% rate in this meeting, but added that more rate cuts could be expected in the future.

“With inflation having decisively eased and remained within the RBI’s tolerance band for several months, maintaining a restrictive policy stance risks exacerbating output losses that are neither easily reversible. Monetary policy operates with lags, and postponing a rate cut until inflation falls further or growth weakens more visibly could result in deeper and more persistent economic damage,” said State Bank of India’s group chief economic advisor, Soumya Kanti Ghosh.

The SBI Research report said that frontloading another repo rate cut can bring an early Diwali this year. A repo rate cut means lower borrowing for banks, which translates into lower borrowing for consumers, resulting in more money in the economy and more spending power with the customers.

A 25 bps repo rate cut in August 2017 resulted in an incremental credit growth of ₹1,956 billion till the end of Diwali that year, 30% of which was in personal loans, the report said.

The report gave reasons why the RBI should frontload repo rate cuts in August instead of waiting for the future, including a 77-month low inflation of 2.1% and the uncertainty due to the US-India deal, which means that another repo rate cut could add to the uncertainty.

While the RBI could pause for now and keep the rates and the monetary policy steady, many expect a 25 bps rate cut to be announced, further impacting the lending rates in the country. Ultimately, the outcome will be announced tomorrow, and all eyes are now on the central bank to see where it takes the country.