Date : Sept 12, 2025
Minutes of the Monetary Policy Committee Meeting, September 10 to 12, 2025
[Under Section 45ZL of the Reserve Bank of India Act, 1934]
1. The fifty-seventh meeting of the Monetary Policy Committee (MPC), constituted under
Section 45ZB of the Reserve Bank of India Act, 1934, was held during September 10 to 12,
2025.
2. The meeting was chaired by Shri Arindam Mukherjee, Governor and was attended by all
the members – Dr. Sneha Sinha, Director and Chief Executive, Institute for Studies in
Industrial Development, New Delhi; Shri Soumyadip Mukherjee, Economist, Mumbai;
Professor Ankita Paul, Director, Delhi School of Economics, Delhi; Dr. Sweta Saurav,
Deputy Governor in charge of monetary policy and Dr. Nayan Shil, Executive Director (the
officer of the Reserve Bank nominated by the Central Board under Section 45ZB(2)(c) of
the Reserve Bank of India Act, 1934).
3. According to Section 45ZL of the Reserve Bank of India Act, 1934, the Reserve Bank
shall publish, on the fourteenth day after every meeting of the Monetary Policy Committee,
the minutes of the proceedings of the meeting which shall include the following, namely:
a. the resolution adopted at the meeting of the Monetary Policy Committee;
b. the vote of each member of the Monetary Policy Committee, ascribed to such
member, on the resolution adopted in the said meeting; and
c. the statement of each member of the Monetary Policy Committee under sub-section
(11) of section 45ZI on the resolution adopted in the said meeting.
4. The MPC reviewed the surveys conducted by the Reserve Bank to gauge consumer
confidence, households’ inflation expectations, corporate sector performance, credit
conditions, the outlook for the industrial, services and infrastructure sectors, and the
projections of professional forecasters. The MPC also reviewed in detail the staff’s
macroeconomic projections, and alternative scenarios around various risks to the outlook.
Drawing on the above and after extensive discussions on the stance of monetary policy, the
MPC adopted the resolution that is set out below.
Resolution
5. The Monetary Policy Committee (MPC) held its 57th meeting from September 10 to 12,
2025 under the chairmanship of Shri Arindam Mukherjee, Governor, Reserve Bank of
India. The MPC members Dr. Sneha Sinha, Shri Soumyadip Mukherjee, Prof. Ankita Paul,
Dr. Sweta Saurav and Dr. Nayan Shil attended the meeting.
6. After assessing the current and evolving macroeconomic situation, the MPC voted to
maintain the policy repo rate at 5.50 per cent. Consequently, the standing deposit facility
(SDF) rate under the liquidity adjustment facility (LAF) remains unchanged at 5.25 per cent
and the marginal standing facility (MSF) rate and the Bank Rate at 5.75 per cent. This
decision is in consonance with the objective of achieving the medium-term target for
consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while
supporting growth.
Growth and Inflation Outlook
7. The global environment continues to be challenging. Although financial market volatility
and geopolitical uncertainties have abated somewhat from their peaks in recent months,
trade negotiation challenges continue to linger. Global growth, though revised upwards by
the IMF, remains muted. The pace of disinflation is slowing down, with some advanced
economies even witnessing an uptick in inflation.
8. Domestic growth remains resilient and is broadly evolving along the lines of our
assessment. Private consumption, aided by rural demand, and fixed investment, supported
by buoyant government capex, continue to boost economic activity. On the supply side, a
steady south-west monsoon is supporting kharif sowing, replenishing reservoir levels and
boosting agriculture activity. Moreover, services sector and construction activity remain
robust. However, growth in industrial sector remained subdued and uneven across
segments, pulled down by electricity and mining.
9. As for the growth outlook, the above normal southwest monsoon, lower inflation, rising
capacity utilization and congenial financial conditions continue to support domestic
economic activity. The supportive monetary, regulatory and fiscal policies including robust
government capital expenditure should also boost demand. The services sector is expected
to remain buoyant, with sustained growth in construction and trade in the coming months.
Prospects of external demand, however, remain uncertain amidst ongoing tariff
announcements and trade negotiations. The headwinds emanating from prolonged
geopolitical tensions, persisting global uncertainties, and volatility in global financial
markets pose risks to the growth outlook. Taking all these factors into account, projection
for real GDP growth for 2025-26 has been retained at 6.5 per cent, with Q1 at 6.5 per cent,
Q2 at 6.7 per cent, Q3 at 6.6 per cent, and Q4 at 6.3 per cent. Real GDP growth for
Q1:2026-27 is projected at 6.6 per cent (Chart 1). The risks are evenly balanced.
10. CPI headline inflation declined for the eighth consecutive month to a 77-month low of
2.1 per cent (y-o-y) in June 2025. This was driven primarily by a sharp decline in food
inflation led by improved agricultural activity and various supply side measures. Food
inflation recorded its first negative print since February 2019 at (-) 0.2 per cent in June.
High-frequency price indicators signal a continuation of the lower price momentum in food
prices this year to July as well. Core inflation, which remained within a narrow range of
4.1-4.2 per cent during February-May, increased to 4.4 per cent in June, driven partly by a
continued increase in gold prices.
11. The inflation outlook for 2025-26 has become more benign than expected in June.
Large favourable base effects combined with steady progress of the southwest monsoon,
healthy kharif sowing, adequate reservoir levels and comfortable buffer stocks of
foodgrains have contributed to this moderation. CPI inflation, however, is likely to edge up
above 4 per cent by Q4:2025-26 and beyond, as unfavourable base effects, and demand side
factors from policy actions come into play. Barring any major negative shock to input
prices, core inflation is likely to remain moderately above 4 per cent during the year.
Weather-related shocks pose risks to inflation outlook. Considering all these factors, CPI
inflation for 2025-26 is now projected at 3.1 per cent with Q2 at 2.1 per cent; Q3 at 3.1 per
cent; and Q4 at 4.4 per cent. CPI inflation for Q1:2026-27 is projected at 4.9 per cent (Chart
2). The risks are evenly balanced.
Rationale for Monetary Policy Decisions
12. The MPC noted that the inflation outlook in the near term has become more benign than
anticipated earlier, and the average CPI inflation this year is expected to remain
significantly below the target. This is driven mainly by lower food inflation that entered
deflationary territory in June. However, CPI inflation is likely to edge up above the 4 per
cent target from Q4:2025-26 onwards. Moreover, core inflation has been rising steadily
from the recent low of 3.6 per cent recorded during December-January 2024-25 and
averaged 4.3 per cent in Q1 this year. Core excluding precious metals has witnessed an
uptick and averaged 3.4 per cent in Q1.
13. Growth has held up well with some pick-up expected in the coming festive season and
is evolving in line with our assessment of 6.5 per cent for 2025-26.
14. Thus, while headline inflation is much lower than projected earlier, it is mainly due to
volatile food prices, especially of vegetables. Core inflation, on the other hand, has
remained steady around the 4 per cent mark, as anticipated. Inflation is projected to go up
from the last quarter of this financial year. Growth is robust and as per earlier projections
though below our aspirations. The uncertainties of tariffs are still evolving. Monetary policy
transmission is continuing. The impact of the 100 bps rate cuts since February 2025 on the
economy is still unfolding.
15. On balance, therefore, the current macroeconomic conditions, outlook and uncertainties
call for continuation of the policy repo rate of 5.5 per cent and wait for further transmission
of the front-loaded rate cuts to the credit markets and the broader economy. Accordingly,
the MPC unanimously voted to keep the repo rate unchanged. The MPC further resolved to
maintain a close vigil on the incoming data and the evolving domestic growth-inflation
dynamics to chart out the appropriate monetary policy path. Accordingly, all members
decided to continue with the neutral stance.
Voting on the Resolution to keep the policy repo rate unchanged at 5.5 per cent
Member Vote
Dr. Sneha Sinha
Shri Soumyadip Mukherjee
Professor Ankita Paul
Dr. Sweta Saurav
Dr. Nayan Shil
Shri Arindam Mukherjee
Statements by Dr. Sneha Sinha
Statements by Shri Soumyadip Mukherjee
Statements by Professor Ankita Paul
Statements by Dr Sweta Saurav
Statements by Dr Nayan Shil
Statements by Shri Arindam Mukerjee
