Archive · 8 Aug 2025
SBI: RBI's August Pause is Technical, Rate Cut Scope Limited
The Reserve Bank of India (RBI) decided not to change interest rates in August, which is seen as a temporary pause.
SBI predicts that inflation will stay low for a while but might increase later.
With the economy expected to grow well, there's not much chance of interest rates being lowered in 2025.
The RBI has also adjusted its inflation forecast for the next year, anticipating a slightly lower rate of price increases.
This decision reflects a cautious approach, monitoring inflation and economic growth carefully.
RBI kept repo rates unchanged in August, a move seen as technical.
SBI suggests inflation may stay below 3% until Q3 FY26, then rise.
Robust GDP growth is expected, limiting the scope for rate cuts in 2025.
SBI believes 5.5% repo rate could be the terminal rate.
RBI revised FY26 CPI inflation projection downwards to 3.1%.
- Who
- RBI, SBI
- What
- RBI's August policy pause and SBI's analysis on future rate cuts.
- When
- August 2025 policy cycle, with projections into FY26 and beyond.
- Where
- India
- Why
- To address inflation and growth dynamics in the Indian economy.
Inflation Outlook
Rate Cut Expectation
Inflation Projections
Inflation Outlook
Inflation below 3% until Q3 FY26.
Rate Cut Expectation
Inflation could rise to 4.9% in Q1 FY27.
- Repo Rate
- 5.5%
- FY26 CPI Inflation Projection
- 3.1%
- RBI Action
- Technical Pause
Sources
RBI Hits Pause on Rate Cut at 5.5%: Real Estate Set to Gain from Stable EMIs and Festive Demand
RBI’s red flag on equity overstretch is timely and well-placed
How will RBI pause impact margins for banks? Axis Securities weighs in
