RBI Likely To Cut Repo Rate By 25 Bps In August MPC Meet: Report

The Reserve Bank of India (RBI) is likely to slash the repo rate by 25 basis points in the Monetary Policy Committee (MPC) meet in August.

Softening in headline inflation allows the central bank to slash the rate to incentivise growth amid heightened global uncertainties.

According to our estimate, the RBI will continue frontloading with a 25 bps cut at its August MPC meeting.

An early rate cut in August could bring ‘early Diwali’ by incentivising credit growth, SBI research said in a report.

Based on empirical evidence, the report suggests a strong pick-up in credit growth during the festive season. This growth is supported by an early rate cut.

The report cautions the decision makers at the central banks not to miss the window for effective intervention by acting too late.

“No point in backloading or committing a type II error,” it said.

The report said that central banks focus on two main goals: keeping prices stable and supporting economic growth.

The Reserve Bank slashed rates by 50 basis points in June this year. This marked the third rate cut delivered in 2025.

The repo rate past three cuts reduced by a total of 1 per cent or 100 basis points in 2025, from 6.5% to 5.5%.

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