Decision in August 2025 Meeting
RBI Monetary Policy Panel August 2025 Review: In its scheduled August 2025 review, the Monetary Policy Committee (MPC) of the Reserve Bank of India decided to keep the policy repo rate steady at 5.5%. The committee also retained its neutral stance, signalling readiness to move rates in either direction based on future economic and inflation data.
Statutory Framework
The MPC is a statutory body created under Section 45ZB of the RBI Act, 1934, a provision added through the 2016 amendment. Its creation was aimed at institutionalising the process of monetary policy decision-making in India.
Static GK fact: The establishment of the MPC followed the signing of the Monetary Policy Framework Agreement between the Government of India and the RBI in February 2015.
Mandate and Role
The core function of the MPC is to decide the policy repo rate that aligns with India’s inflation target of 4% with a tolerance band of ±2%. This ensures a balance between price stability and economic expansion.
Static GK fact: India formally adopted an inflation-targeting framework in 2016, making the MPC’s role central to monetary governance.
Membership Composition
The MPC consists of six members:
- Three officials from the RBI, including the Governor and a Deputy Governor.
- Three experts appointed by the Central Government from outside the RBI.
The RBI Governor acts as the ex officio Chairperson.
Static GK fact: Government-appointed members serve a single four-year term without reappointment eligibility.
Meeting Frequency and Quorum
The panel must meet at least four times in a financial year, with four members needed for a valid session. In practice, the MPC usually convenes every two months for policy deliberations.
Decision-Making and Voting Rules
Every member has one vote, and decisions are taken by majority. If votes are tied, the Governor’s casting vote decides the outcome. The RBI also publishes each member’s vote to maintain transparency in the process.
Static GK Tip: Publishing voting patterns helps markets understand the diversity of views within the MPC.
Importance of the August 2025 Outcome
By keeping rates unchanged, the MPC aims to observe inflation trends while supporting growth momentum. The neutral stance offers flexibility for rate adjustments in response to evolving domestic and global economic conditions.
Static Usthadian Current Affairs Table
RBI Monetary Policy Panel August 2025 Review:
| Fact | Detail |
| Repo rate (Aug 2025) | 5.5% |
| MPC Stance | Neutral |
| Legal basis | Section 45ZB of RBI Act, 1934 (amended 2016) |
| Core mandate | Maintain inflation target |
| Inflation target | 4% ± 2% |
| Total members | 6 |
| RBI nominees | 3 |
| Govt-appointed members | 3 |
| Chairperson | RBI Governor (ex officio) |
| Minimum meetings per year | 4 |
| Quorum requirement | 4 members |
| Decision-making | Majority vote |
| Casting vote | RBI Governor |
| MPC inception year | 2016 |
| First meeting | October 2016 |
| Inflation-targeting adoption | 2016 |
| Govt-appointed term | 4 years |
| Vote publication | Yes |
| Usual meeting frequency | Every two months |
