RBI monetary policy meetings highlight tepid inflation, reveal steady domestic growth outlook

Reserve Bank of India (RBI) announced yesterday minutes of the fifty-sixth meeting of the Monetary Policy Committee (MPC), was held during August 4 to 6, 2025. Prof. Ram Singh stated that the CPI headline inflation has continued on its downward trajectory during the last two quarters, almost touching the floor of the tolerance band in June. The unexpected drop in CPI inflation has been driven primarily by a sharp decline in food inflation that registered its first negative print in June 2025 at (-) 0.2 per cent, the lowest since February 2019. Decline in food inflation is broad-based. He noted further that the GDP growth is holding up so far amidst mixed signals coming through some high-frequency indicators.

Rajiv Ranjan stated that the growth outlook for the Indian economy for 2025-26 has been evolving on the lines projected in the previous policy, despite unfavourable global demand conditions. The monsoon season has been progressing well with higher kharif sowing. Performance of the non-financial corporate sector is holding well. Key high-frequency volume-based activity indicators show that economic activity is holding firm. As such, growth is tracking our earlier projections, robust but still below aspirations

Poonam Gupta noted that despite receding from their peak of May and June, financial market volatility and geopolitical uncertainties have remained elevated; and some trade uncertainties have aggravated for India. Notwithstanding these challenges, the Indian economy remains resilient overall. A favourable monsoon, low inflation, government infrastructure spending and congenial financial conditions facilitated by frontloaded policy easing remains supportive of domestic economic activity

RBI Governor Sanjay Malhotra noted that global economy continues to traverse a period of heightened uncertainty on account of trade and tariff negotiations and lingering geopolitical tensions. Global growth outlook, however, has improved at the margin for 2025 driven by front loading of exports in anticipation of tariffs, easing of financial conditions and fiscal expansion in advanced economies (AEs).

He stated that domestic growth has evolved largely in line with the assessment set out in our June policy. During the remaining part of the financial year, growth is likely to receive support from both favourable supply-side factors as well as a supportive policy environment. Monsoon has progressed well, sowing has been satisfactory, and reservoir levels are comfortable, all of which augur well for farm output and rural demand. Urban demand is likely to pick up during the festive season, especially in a period of benign inflation. Services sector activity is also likely to remain strong, as evident from forward-looking assessments from surveys.

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